(T. D. 1352.) Marking packages of distilled spirits. [Circular No. 33—Int. Rev. No. 723.] TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue and others: In accordance with opinions rendered by the Attorney-General in reference to the provision of section 3287 of the Revised Statutes of the United States, requiring distilled spirits, when drawn from the receiving cisterns in the distillery, to be marked or branded with the names "high wines, alcohol, or spirits, as the case may be," the regulations relating to the marking or branding of such casks or packages of distilled spirits are modified as follows: All such distilled spirits, when drawn from the receiving cisterns, will be classified in three classes-namely, "high wines," "alcohol," or "spirits, as the case may be "--and will be marked or branded on the stamp head accordingly: 1. High wines.-That which is practically the first product of distillation in which the substances, congeneric with ethyl alcohol, have not been transformed or their properties otherwise partially eliminated, so as to convert them into any form of potable spirits, will be marked "high wines." 2. Alcohol.—(a) All forms of distilled spirits from which the substances congeneric with ethyl alcohol have been removed for practical purposes altogether, and which have been heretofore marked as "pure, neutral, or cologne spirits," will be marked "alcohol." (b) That product which has been commercially known as "alcohol" from which these congeneric substances have not been removed will be marked "commercial alcohol." 3. Spirits, as the case may be.-Those products of distillation in which, by reason of the original material used and the methods of distillation employed, the characteristic substances congeneric with alcohol have been retained, which differentiate them into various forms of potable spirits-such as whisky, brandy, rum, and gin— will be marked with the particular name of such potable spirit, as the case may be, without other description and without the addition of any adjective or descriptive word whatsoever; and the name of such particular spirit will be used, even although when any of such spirits may be drawn from the receiving cisterns into casks certain congeneric products of distillation have not been changed by aging or otherwise, so as to bring them to the potable form in which they are ultimately to be placed upon the market, provided such spirits have, before being drawn into the casks, been diluted to potable proof, so as to then constitute a crude form of potable spirits. MARKING OF RECTIFIERS' PACKAGES. Packages of distilled spirits stamped by gauger after rectification at a rectifying house shall be marked as indicated in one of the five following paragraphs, as the case may require, namely: 1. Those products of distillation which, without being blended or compounded with other spirits, have been so treated as to partially transform or otherwise partially eliminate the original congeneric substances and bring them to a condition of a particular form of potable spirits, will be marked with the name of such form of potable spirits, as the case may be, as determined under the paragraph above numbered 3, relating to marking at distilleries. 2. A mixture of such potable spirits of the same kind will be marked "blended," followed by the particular name of such spirits, as, for example, "blended whisky." 3. A mixture of a particular kind of such potable spirits with alcohol, provided there is enough of such potable spirits to make it a real compound and not the mere semblance of one, will be marked as a "compound of" such spirit with the distillate with which it is mixed-as, for example, "a compound of whisky and grain distillate;" or, if preferred, with the particular name of such spirit compounded with" such other distillate—as, for example, "whisky, compounded with grain distillate." 66 4. Alcohol, commercial alcohol, or high wines, which have been manipulated by the aid of artificial flavors, colors, or extracts, or otherwise, so as to resemble some particular kind of potable spirits, will be marked with the name of such spirits, preceded by the word "imitation"--as, for example, "imitation whisky." 5. Packages containing cordials, liqueurs, and other like artificial compounds, will be marked with such appropriate name as shall indicate the kind of the contents. WHOLESALE LIQUOR DEALERS' PACKAGES. Packages filled on the premises of a wholesale liquor dealer, as provided by section 3323, United States Revised Statutes, must be marked by the dealer on the stamp end, in conformity with these regulations. All words in the marks or brands on the heads of packages of distilled spirits must be legibly marked or branded in letters not less than 1 inch in length. The provisions of this circular shall take effect on the 1st day of July, 1908, and all regulations inconsistent with the foregoing are hereby rescinded. Collectors will place a copy of this circular in the hands of all gauging officers, and also supply a copy to each distiller, rectifier, and wholesale liquor dealer in their respective districts, and see that its provisions are fully and carefully observed. Approved: JOHN G. CAPERS, Commissioner. GEORGE B. CORTELYOU, Secretary of the Treasury. (T. D. 1353.) Oleomargarine for export. Oleomargarine may be withdrawn free of tax from the place of manufacture, under section 16 of the act of August 2, 1888, for export to the Canal Zone, inasmuch as shipments are landed at Colon or Panama, which are foreign territory. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., May 9, 1908. SIR: This office is in receipt of your letter of the 6th instant, in which you ask to be informed if, under section 16 of the act of August 2, 1886, providing for the withdrawal of oleomargarine free of tax from the place of manufacture for export to a foreign country, shipments of this product may be made to the Canal Zone without payment of internal-revenue taxes. Replying, you are advised that the Attorney-General has held that the effect of the Executive order of December 3, 1904, "is to prevent direct shipments into the Zone; and any goods consigned to Panama or Colon, although ultimately to go to the Zone, are shipped to a foreign country at the ports of which they must be entered and where they would pay duty." (25 Op. Atty.-Gen., 324) This opinion is the basis of a decision by this Department (T. D. 28315), in which it is held that drawback allowance under section 30 of the tariff act of 1897 may properly be made on shipments of beer to the Canal Zone, and this would also apply to other articles upon which internal-revenue tax is imposed and that may be withdrawn free of tax under bond, or with the allowance of drawback for export to a foreign country. Therefore, this office holds that in view of such opinion oleomargarine may be withdrawn from the place of manufacture free of tax for shipment to the Canal Zone as to a foreign country, inasmuch as they are not direct shipments, but are landed in foreign territory, thereby making them exportations under the letter of the law. Respectfully, JOHN G. CAPERS, Commissioner. (T. D. 1354.) Oleomargarine. So-called shortening compounds or substitutes for lard composed of animal fats or oils, or vegetable oils, separately or mixtures and compounds of such animal fats or oils, or vegetable oils when made in imitation or semblance of butter, are taxable as oleomargarine, notwithstanding such articles may be advertised as substitutes for lard. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., May 12, 1908. To collectors, internal-revenue agents, and others concerned: For this purpose it is first essential that a proper interpretation of the definition of "oleomargarine" be had. This object can best be attained by a close examination of the language of the law taken in connection with the evident intent of Congress, which in this case will be found in the definition as given in section 2 of the act of August 2, 1886, supplemented by section 8 as amended by act of May 9, 1902. Section 2, act of August 2, 1886: That for the purposes of this Act certain manufactured substances, certain extracts, and certain mixtures and compounds, including such mixtures and compounds with butter, shall be known and designated as "oleomargarine," namely: All substances heretofore known as oleomargarine, oleo, cleomargarine-oil, butterine, lardine, suine and neutral; all mixtures and compounds of oleomargarine, oleo, oleomargarine oil, butterine, larding, suine, and neutral; all lard extracts and tallow extracts; and all mixtures and compounds of tallow, beef-fat, suet, lard, lard-oil, vegetable oil, annotto, and other coloring matter, intestinal fat, and offal fat made in imitation or semblance of butter, or when so made, calculated or intended to be sold as butter or for butter. Section 8, act of August 2, 1886, as amended by section 3, act of May 9, 1902: That upon oleomargarine which shall be manufactured and sold, or removed for consumption or use, there shall be assessed and collected a tax of ten cents per pound, to paid by the manufacturers thereof; and any fractional part of a pound in a package shall be taxed as a pound: Provided, When oleomargarine is free from artificial coloration that causes it to look like butter of any shade of yellow said tax shall be onefourth of one cent per pound. * * * It is evident that section 2 names with some particularity the ingredients, mixtures, and compounds of animal fats or oils and vegetable oils which, if used, will make the resultant product taxable as oleomargarine if made "in imitation or semblance of butter, or when so made calculated or intended to be sold as butter or for butter." The taxing provision of section 8 of the act of August 2, 1886, as amended by section 3 of the act of May 9, 1902, imposes two rates of tax upon the product resulting from mixtures or compounds of the ingredients or materials mentioned in section 2 of the law, the distinction as to the rates imposed being based upon the use of artificial coloring matter that causes the product to look like butter of any shade of yellow. This provision, together with section 2, resolves the question of the taxability of a product to the proposition whether or not it is "in imitation or semblance of butter." Undoubtedly, a product may be made in the semblance of butter without the addition of artificial coloring matter, as evidenced by the distinction made in the two rates of tax, and the question now is to clearly fix a line dividing all compounds into two classes—those which are "in semblance of butter," and taxable at one of the two rates, and those mixtures or compounds which are "not in semblance of butter" and exempt from taxation under the law. I am of the opinion that this can be accomplished by following closely the composition of butter, for which the taxable article is a substitute, and the composition of lard, for which it is claimed the so-called cooking fats or shortening compounds are substitutes, as a basis of division, always bearing in mind with reference to the question of taxation the distinction of "in semblance to butter." The four essentials for determining this point are flavor, texture, moisture, and color, either one or all of which may be found in the article, and bring it within the classification of oleomargarine without regard to the manner of advertising such product. I am borne out in this opinion by the fact that it has recently been discovered that certain mixtures of animal fats or oils, and vegetable oils held out by advertisement as cooking fats and substitutes for lard, command a higher price upon the market than the article for which it is claimed they are substitutes, and in a case recently decided in the United States district court it was shown that one of the so-called shortening compounds had been artificially colored and sold as butter, and the court held that it was properly taxable as artificially colored olemargarine. The natural assumption is that if this product, after the addition of coloring matter, was subject to tax at the higher rate it would follow that its original characteristics, before addition of coloring matter, were such as to subject it to tax at the lower rate. In view of the foregoing statements, I am of the opinion that all animal fats or oils and vegetable oils separately, and all compounds |