ing of ladled butter by washing with water or otherwise than by use of chemicals or other substances will not give the butter the status of process or renovated butter or adulterated butter. "Melted" as used in this subpart means such melting as is distinguishable by the Waterhouse test.

For definitions of "butter" and "adulterated butter" see section 2320 (a) and (b), I. R. C.

§ 310.121 Commodity tax. (a) The tax on process or renovated butter accrues upon manufacture or sale or removal from the place of manufacture. The tax shall be paid by the manufacturer by affixing stamps to the packages before they are removed from the bonded premises. If, however, the Commissioner deems it necessary, he may require the attachment of stamps, or may assess the tax, at any time after manufacture. A fraction of a pound is tax

able as a pound.

(b) The law makes no provision for exporting process or renovated butter free of tax.

§ 310.122 Manufacturers' special-tax liability. A manufacturer shall make return on Form 11 to the collector, pay special tax, and comply with the provisions contained in subpart G, relating to special taxes. As to execution of returns, see § 310.93.

§ 310.123 Administrative requirements -(a) Provisions applicable. The provisions of this part as to oleomargarine manufacturers' notices (§ 310.22), inventories (§ 310.23), records (§ 310 24), returns (§ 310.25), factories (§ 310.26) bonds, (§ 310.27), sales by legal process (§ 310.99), and all other provisions of this part relating to oleomargarine, so far as applicable, are hereby extended and made to apply to process or renovated butter.

(b) Penal sum of bond. The penal sum of the bond required of a manufacturer of process or renovated butter shall be not less than $500.

§ 310.124 Packages-(a) Bulk containers. Manufacturers shall pack process or renovated butter in firkins, tubs, or other wooden, fiber, or paper containers. Except when packed for export (see § 310.131), packages shall not be incased in jute, burlap, or other heavy wrapping.

(b) Empty containers. When any tax-paid packages of process or renovated butter are emptied, the stamps

must be destroyed as provided in section 2305, I. R. C., relating to oleomargarine.

(c) Prints and rolls. Manufacturers may pack process or renovated butter in prints or rolls and place them in paper cartons or wrappers, or containers of tin or similar material, sealed hermetically or otherwise, provided the coverings are branded as provided in § 310.128 (b).

§ 310.125 Caution notice. Before removal from the factory each statutory package of process or renovated butter must have legibly and conspicuously printed or labeled on it the following notice, which must measure not less than 3 inches long by 11⁄2 inches wide: Factory No. ---- District, State of ➖➖➖➖) ---NOTICE: The manufacturer of the renovated butter herein contained has complied with all the requirements of the law and regulations authorized thereby. Every person is cautioned not to use again either this package for renovated butter or tax stamp thereon or to remove the contents of this package without destroying said stamp, under penalty provided by law in such cases.

§ 310.126 Stamping packages. (a) Stamps for the payment of the tax on process or renovated butter are designated "Process Butter" and are issued in sheets of 20 stamps each, in denominations of 10, 20, 30, 40, 50, 60 and 100 pounds. One-pound coupon stamps for use in connection with stamps of the foregoing denominations are issued in sheets of 200 stamps each.

(b) The provisions of § 310.31 as to ordering, affixing, and canceling stamps, and 310.32 as to repacking and restamping oleomargarine, so far as applicable, are hereby extended and made to apply to process or renovated butter. CROSS REFERENCE: For Bureau of Customs regulations relating to internal revenue stamps required for oleomargarine, see 19 CFR 11.5.

shall keep records and render returns corresponding to those required of wholesale dealers in oleomargarine by §§ 310.42, 310.43, respectively.

(d) Other administrative provisions. All sections of the regulations in this part relating to wholesale dealers in oleomargarine and adulterated butter are hereby made to apply, so far as applicable, to wholesale dealers in process or renovated butter.

§ 310.128 Branding-(a) Statutory packages. (1) Before removal from the factory each package of process or renovated butter shall have legibly printed or stenciled on one of its sides the legend "Process Butter" or "Renovated Butter"; also the factory number, district, and State, and the net weight, in the following manner:

PROCESS BUTTER

Factory No. 2, 2d Dist., New York
Net Weight, 60 lbs.

(2) The legend "Process Butter" or "Renovated Butter" shall be in bold-face gothic letters not less than three-quarters of an inch square and the other words and figures not less than half an inch square. The color of the legend shall be in strong contrast to that of the package,

(1) The

(b) Cartons and wrappers. wrappers, cartons, or other containers in which prints or rolls are placed shall be branded with the legend "Process Butter" or "Renovated Butter," in bold-face gothic letters, not less than three-eighths of an inch square. Such legend shall form a strong contrast to the color of the wrapper or container. No other marks shall be made on the side of the wrapper or container on which the legend is placed.

(2) Each package must show the manufacturer's name and address or the factory number, district, and State, and bear a plain and conspicuous statement of the net weight of contents. Such wrappers, cartons, or other containers shall bear no pictorial or other representation which may create the impression that the article is butter as defined by the Federal Food, Drug, and Cosmetic Act (21 U. S. C. 321a). (See § 310.100 (b).)

(c) Surface impression. The top surface of solid-packed goods shall be imprinted with the legend "Process Butter" or "Renovated Butter," in plain gothic letters not less than half an inch square, and impressed at least an eighth of an

inch deep. Prints and rolls shall be similarly impressed with letters not less than three-eighths of an inch square. The surface impression may be omitted from prints and rolls of less than a pound unit weight, provided there is compliance with all other requirements.

(d) Brands requiring approval. With the exception of shipping marks, any marks, brands, or labels, other than those prescribed by the regulations in this part, shall be approved by the Secretary of Agriculture before they are used on packages of process or renovated butter.

(e) Evidence of approval. Approved copies of all marks, brands, or labels shall be retained at the manufacturer's registered place of business, available for inspection by representatives of the Department of Agriculture.

(f) Penalty for omitting or removing brand. Every manufacturer of process or renovated butter who fails to brand the product and the containers in which it is packed, is punishable by a fine of not less than $50 nor more than $500 or by imprisonment for not less than 1 month nor more than 6 months, or both. Every person who removes any such brands from any package of process or renovated butter is punishable by a fine not exceeding $1,000 or imprisonment not exceeding 1 year, or both.

§ 310.129 Misbranding under Federal Food, Drug, and Cosmetic Act. Misbranding any article of food intended for interstate commerce, or manufactured or offered for sale in any Territory of the United States or the District of Columbia, is prohibited. For the purposes of this act (Federal Food, Drug, and Cosmetic Act, 21 U. S. C. Chapter 9) an article shall also be deemed to be misbranded, in the case of food:

(a) If it be an imitation of, or offered for sale under the distinctive name of, another article.

(b) If it be labeled or branded so as to deceive or mislead the purchaser, or purports to be a foreign product when not so, or if the contents of the package, as originally put up, shall have been removed in whole or in part and other contents shall have been placed in such package.

(c) If in package form, the quantity of the contents be not plainly and conspicuously marked on the outside of the package in terms of weight, measure, or numerical count.

(d) If the package containing it or its label shall bear any statement, design, or device regarding the ingredients or the substances contained therein, which statement, design, or device shall be false or misleading in any particular.

No provision of the regulations in this part shall be construed so as to relieve any person from compliance with the Federal Food, Drug, and Cosmetic Act.

CROSS REFERENCE: For general regulations of the Food and Drug Administration, Federal Security Agency, under the Federal Food, Drug, and Cosmetic Act relating to misbranding and labeling of products, see 21 CFR Part I.

§ 310.130 Factory inspection-(a) Authority to inspect. Inspectors of the Department of Agriculture, appointed for the purpose by the Secretary of Agriculture, are authorized to enter all factories and storehouses where process or renovated butter is manufactured, packed, or prepared for market, for the purpose of examination or inspection authorized by this act.

(b) Report of condition. Periodic inspection of each factory shall be made by such inspectors who will submit a complete report to the Secretary of Agriculture on the sanitation of the premises, the character and condition of the materials used, and the quantity and quality of process or renovated butter produced. The sanitary provisions of the meat inspection act shall apply to the sanitary inspection of process or renovated butter factories. (See act of August 10, 1912, 37 Stat. 273.)

(c) Impure ingredients. Process or renovated butter containing any filthy, decomposed, or putrid animal or vegetable substance shall be deemed adulterated under the Food, Drug, and Cosmetic Act.

(d) Deleterious products seizable. The Secretary of Agriculture will determine whether or not materials being used in the manufacture of process or renovated butter will be deleterious to health or unwholesome in the finished product. If any materials which have been so determined to be deleterious to health or unwholesome in the finished product are found to be present in any process or renovated butter, intended for, or in course of, exportation or shipment in interstate commerce, such process or renovated butter will be confiscated.

CROSS REFERENCE: For Bureau of Dairy Industry regulations relating to the inspection

of factories where process or renovated butter is manufactured by inspectors of the Department of Agriculture, see 9 CFR Part 301.

§ 310.131 Exportation requirements— (a) Stamping, branding, covering. Original packages of process or renovated butter for export shall be stamped and branded as in the case of packages for domestic use (see §§ 310.126, 310.128) and may be covered with cloth, jute, or burlap. The outer covering shall be conspicuously stenciled with the legend "Process Butter" or "Renovated Butter," in boldface gothic letters not less than an inch square, and the words "For Export Only" on the line beneath, in similar letters not less than three-eighths of an inch square.

(b) Inspection. Process or renovated butter for export shall be examined by inspectors of the Department of Agriculture, who will issue a certificate as to its purity, quality, and grade and the sufficiency of the stamps and brands. If inspection is not made before the outer coverings are placed upon the packages, the exporter may be required to remove them.

§ 310.132 Reports of violations—(a) By agricultural inspectors. Inspectors of the Department of Agriculture who find on the market process or renovated butter, or butter suspected of being processed, renovated, or adulterated, without the required tax stamps and caution notice, will report the matter to the nearest internal-revenue officer. If in doubt as to the character of the product, the inspector should forward samples to the Laboratory Division, Treasury Department, Washington, D. C., for analysis, as provided in § 310.13 (a).

(b) By revenue officers. Internal-revenue officers who discover on the market process or renovated butter which does not comply with the regulations in this part will promptly notify the Chief of the Bureau of Dairy Industry, Department of Agriculture, Washington, D. C., as to their findings.

§ 310.133 Authority for regulations. The regulations in this part relating to process or renovated butter are dual in their scope. The provisions pertaining to internal-revenue matters are under the jurisdiction of the Secretary of the Treasury and those relating to inspection are under the control of the Secretary of Agriculture. The regulations pertaining to internal-revenue matters are made

under the authority of section 3901, I. R. C.

§ 310.134 Administrative jurisdiction. The administration of §§ 310.120-310.127, as to process or renovated butter, is under the Commissioner of Internal Revenue, Treasury Department, and the administration of §§ 310.128-310.131 is under the Chief of the Bureau of Dairy Industry, Department of Agriculture, Washington, D. C. Correspondence pertaining to the subject matter of the respective sections should be addressed to the bureau having jurisdiction in the matter.

CROSS REFERENCE: For general regulations of the Bureau of Dairy Industry, Department of Agriculture, see 9 CFR Chapter III.

SUBPART A-DEFINITIONS

§ 312.100 Meaning of terms. As used in the regulations in this part:

(a) The terms defined in the applicable provisions of law shall have the meaning so assigned to them.

(b) The term "Secretary" means the Secretary of the Treasury.

(c) The term "Commissioner" means the Commissioner of Internal Revenue. (d) The term "collector" means a collector of internal revenue.

(e) [Reserved].

(f) The term "tax" means the tax imposed by section 3490, I. R. C.

(g) The term "manufacture" means that process of manufacturing which directly results in manufactured sugar.

(h) The term "manufacturer" means the person who performs that process of manufacturing which directly results in manufactured sugar. The term also includes any person who, having acquired any sugar which is to be manufactured into manufactured sugar, without further refining or improving it in quality, sells such sugar as manufactured sugar or uses such sugar as manufactured sugar in the production of other articles for sale.

(i) The terms "includes" and "including" when used in a statement contained in the regulations in this part, shall not be deemed to exclude other things otherwise within the meaning of such statement.

SUBPART BTAX ON THE MANUFACTURE OF MANUFACTURED SUGAR

§ 312.200 Effective date. The tax is effective with respect to the manufacture of manufactured sugar from the first moment of September 1, 1937, the date of enactment of the Sugar Act of 1937. (See § 312.205.)

§ 312.201 Geographical scope. The tax is applicable to the manufacture of manufactured sugar in the United States, which is defined in the act to include only the States, the Territories of Hawaii and Alaska, the District of Columbia, and Puerto Rico.

§ 312.202 Rate of tax. The rates of tax imposed upon the manufacture of manufactured sugar are:

(a) On all manufactured sugar testing by the polariscope 92 sugar degrees, 0.465 cent per pound, and for each additional

sugar degree shown by the polariscope test, 0.00875 cent per pound additional, and fractions of a degree in proportion;

(b) On all manufactured sugar testing by the polariscope less than 92 sugar degrees, 0.5144 cent per pound of the total sugars therein.

(See section 3507 (b), I. R. C., for definition of "manufactured sugar.")

CROSS REFERENCE: For customs regulations relating to the interpretation of "testing by the polariscope," see 19 CFR 13.1.

§ 312.203 Measure of tax. The measure of the tax is the number of pounds of manufactured sugar produced by the manufacturer. In the case of a person considered, under section 3492, I. R. C., to be a manufacturer, the measure of the tax is the number of pounds of manufactured sugar sold, or used in the production of other articles for sale, by such person.

§ 312.204 Liability for tax. Liability for the tax attaches to the manufacturer. (See 312.100 (h) for definition of "manufacturer.")

§ 312.205 When the tax attaches. (a) The tax attaches upon the completion of that process of manufacturing the direct result of which is manufactured sugar. If the completion of the manufacturing process takes place during the period the tax is in effect, the tax attaches, notwithstanding that some part of the manufacturing process took place before such period.

(b) If a person acquires sugar to be manufactured into manufactured sugar, and, without further refining or improving it in quality, sells such sugar as manufactured sugar, or uses it as manufactured sugar in the production of other articles for sale, such person is liable for the tax as a manufacturer. The tax attaches at the time of the sale of such sugar or at the time of its use in the production of other articles for sale, by such person. (See § 312.502, relating to payment of tax.)

§ 312.206 Exemption. (a) No tax is required to be paid on the manufacture of manufactured sugar by, or for, the producer of the sugar beets or sugarcane from which such manufactured sugar was derived, for consumption by the producer's own family, employees, or household. This exemption is applicable only in cases where the producer in question is an individual; it does not apply if the

producer of the sugar beets or sugarcane is a corporation.

(b) To support the exemption from tax under the provisions of section 402 (d) of the act with respect to that quantity of manufactured sugar delivered by the manufacturer to the producer, the manufacturer shall obtain from each producer an affidavit or certificate, in duplicate, on Form 2 (Sugar). The original affidavit or certificate shall be filed with the return on which the exemption is claimed, and a duplicate copy kept on the premises where the manufacturing was done. Such affidavit on Form 2 (Sugar) shall be executed by the producer with respect to each lot of manufactured sugar delivered to him by the manufacturer.

(c) It is not necessary that the manufactured sugar received by the producer be manufactured from the identical sugar beets or sugarcane delivered. The manufacturer may deliver to the producer an amount of manufactured sugar not in excess of the amount which would have been manufactured from the particular quantity of sugar beets or sugarcane the producer has delivered to the manufacturer. All the manufactured sugar to be delivered to a producer for consumption by his family, employees, or household need not be delivered to him at one time, but a separate affidavit or certificate on Form 2 (Sugar) must be obtained for each withdrawal.

(d) The deduction in the manufacturer's return in connection with this exemption is limited to manufactured sugar actually delivered to the producer during the period for which the return is made and shall not include any quantity of manufactured sugar which has not actually been delivered to the producer.

(e) Under the act this exemption is applicable only to that quantity of manufactured sugar required by the producer for consumption by his family, employees, or household. The manufacturer is required to exercise care in accepting affidavits or certificates from producers to ascertain that no quantity of manufactured sugar in excess of that required for such use is delivered to the producer under this exemption.

SUBPART C-EXPORT PAYMENTS

§ 312.300 Who may file the claim. The person named as consignor in the bill of lading under which the manufac