(c) CROSS REFERENCES.

For penalty for failure of a distiller or rectifier to file application for registration as required by this section, see section 5601 (a) (2), and for penalty for the filing of a false application by a distiller, bonded warehouseman, rectifier, or bottler of distilled spirits, see section 5601 (a) (3).

SEC. 5172. APPLICATION.

The application for registration required by section 5171 (a) shall, in such manner and form as the Secretary or his delegate may by regulations prescribe, identify the applicant and persons interested in the business (or businesses) covered by the application, show the nature, location and extent of the premises, show the specific type or types of operations to be conducted on such premises, and show any other information which the Secretary or his delegate may by regulations require for the purpose of carrying out the provisions of this chapter.

SEC. 5173. QUALIFICATION BONDS.

(a) GENERAL PROVISIONS.-Every person intending to commence or to continue the business of a distiller, bonded warehouseman, or rectifier, on filing with the Secretary or his delegate an application for registration of his plant, and before commencing or continuing such business, shall file bond in the form prescribed by the Secretary or his delegate, conditioned that he shall faithfully comply with all the provisions of law and regulations relating to the duties and business of a distiller, bonded warehouseman, or rectifier, as the case may be (including the payment of taxes imposed by this chapter), and shall pay all penalties incurred or fines imposed on him for violation of any of the said provisions.

(b) DISTILLER'S BOND.-Every person intending to commence or continue the business of a distiller shall give bond in a penal sum not less than the amount of tax on spirits that will be produced in his distillery during a period of 15 days, except that such bond shall be in a sum of not less than $5,000 nor more than $100,000.

(1) CONDITIONS OF APPROVAL.-In addition to the requirements of subsection (a), the distiller's bond shall be conditioned that he shall not suffer the property, or any part thereof, subject to lien under section 5004 (b) (1) to be encumbered by mortgage, judgment, or other lien during the time in which he shall carry on such business (except that this condition shall not apply during the term of any bond given under subparagraph (C)), and no bond of a distiller shall be approved unless the Secretary or his delegate is satisfied that the situation of the land and buildings which will constitute his bonded premises (as described in his application for registration) is not such as would enable the distiller to defraud the United States, and unless

(A) the distiller is the owner in fee, unencumbered by any mortgage, judgment, or other lien, of the lot or tract of land subject to lien under section 5004 (b) (1); or

(B) the distiller files with the officer designated for the purpose by the Secretary or his delegate, in connection with his application for registration, the written consent of the owner of the fee, and of any mortgagee, judgment creditor, or other person having a lien thereon, duly acknowledge, that such premises may be used

for the purpose of distilling spirits, subject to the provisions of law, and expressly stipulating that the lien of the United States, for taxes on distilled spirits produced thereon and penalties relating thereto, shall have priority of such mortgage, judgment, or other encumbrance, and that in the case of the forfeiture of such premises, or any part thereof, the title to the same shall vest in the United States, discharged from such mortgage, judgment, or other encumbrance; or

(C) the distiller files a bond, approved by the Secretary or his delegate, in the penal sum equal to the appraised value of the property subject to lien under section 5004 (b) (1), except that such bond shall not exceed the sum of $300,000. Such value shall be determined, and such bond shall be executed in such form and with such sureties and filed with the officer designated by the Secretary or his delegate, under such regulations as the Secretary or his delegate shall prescribe.

(2) CANCELLATION OF INDEMNITY BOND.-When the liability for which an indemnity bond given under paragraph (1) (C) ceases to exist, such bond may be cancelled upon application to the Secretary or his delegate.

(3) JUDICIAL SALE. In the case of any distillery sold at judicial or other sale in favor of the United States, a bond in lieu of consent under paragraph (1) (B) may be taken at the discretion of the Secretary or his delegate, and the person giving such bond may be allowed to operate such distillery during the existence of the right of redemption from such sale, on complying with all the other provisions of law.

(c) BONDED WAREHOUSEMAN'S BONDS.

(1) GENERAL REQUIREMENTS.-Every person intending to commence or continue the business of a bonded warehouseman shall give bond in a penal sum not less than the amount of tax on distilled spirits stored on such premises and in transit thereto, except that such bond shall not exceed the sum of $200,000. In addition to the requirements in subsection (a), such bond shall be conditioned(A) on the withdrawal of the spirits from storage on bonded premises within the time prescribed for the determination of tax under section 5006 (a) (2), and

(B) on payment of the tax, except as otherwise provided by law, on all spirits withdrawn from storage on the bonded premises. (2) EXCEPTION.-The Secretary or his delegate may by regulations specify bonded warehousing operations, other than the storage of more than 500 casks or packages of distilled spirits in wooden containers, for which a bond in a maximum sum of less than $200,000 will be approved, and in such cases the Secretary or his delegate shall by regulations prescribe the maximum penal sum of such bonds. (d) RECTIFIER'S BOND.-Every person intending to commence or continue the business of a rectifier shall give bond in a penal sum not less than the amount of tax the rectifier will be liable to pay in a period of 30 days under sections 5021 and 5022, except that such bond shall not exceed the sum of $100,000, and shall not be less than $1,000.

(e) COMBINED OPERATIONS.

(1) DISTILLED SPIRITS PLANTS.-Except as provided in paragraph (2), any person intending to commence or continue business as proprietor of a distilled spirits plant who would otherwise be required to give more than one bond under the provisions of subsections (b) (other than indemnity bonds), (c), and (d), shall, in lieu thereof, give bond in a penal sum equal to the combined penal sums which would have been required under such subsections; but in no case shall the combined operations bond be in a penal sum in excess of $200,000 if all operations are to be conducted on bonded premises, or in excess of $250,000 for the distilled spirits plant. Bonds given under this paragraph shall contain the terms and conditions of the bonds in lieu of which they are given.

(2) DISTILLED SPIRITS PLANTS AND ADJACENT BONDED WINE CEL LARS. Any person intending to commence or continue business as proprietor of a bonded wine cellar and an adjacent distilled spirits plant qualified for the production of distilled spirits shall, in lieu of the bonds which would otherwise be required under the provisions of subsection (b) (other than indemnity bonds), (c), and (d), and section 5354 (other than supplemental bonds to cover additional liability arising as a result of deferral of payment of tax), give bond in a penal sum equal to the combined penal sums which would have been required under such provisions; but in no case shall the combined operations bond be in a penal sum in excess of $150,000 if the distilled spirits plant is qualified solely for the production of distilled spirits, in excess of $250,000 if the distilled spirits plant is qualified only for production and bonded warehousing or for production and rectification and bottling, or in excess of $300,000 for the distilled spirits plant and bonded wine cellar. Bonds given under this paragraph shall contain the terms and conditions of the bonds in lieu of which they are given.

(f) BLANKET BONDS.-The Secretary or his delegate may by regulations authorize any person (including, in the case of a corporat.on, controlled or wholly owned subsidiaries) operating more than one distilled spirits plant in a geographical area designated in regulations prescribed by the Secretary or his delegate to give a blanket bond covering the operation of any two or more of such plants and any bonded wine cellars which are adjacent to such plants and which otherwise could be covered under a combined operations bond as provided for in subsection (e) (2). The penal sum of such blanket bond shall be calculated in accordance with the following table:

Bonds given under this subsection shall be in lieu of the bonds required under subsections (b) (other than indemnity bonds), (c), (d), and (e), as the case may be, and shall contain the terms and conditions of such bonds.

(g) LIABILITY UNDER COMBINED OPERATIONS AND BLANKET BONDS. The total amount of any bond given under subsection (e) or (f) shall be available for the satisfaction of any liability incurred under the terms or conditions of such bond.

SEC. 5174. WITHDRAWAL BONDS.

(a) REQUIREMENTS.-No distilled spirits, other than distilled spirits withdrawn under section 5214 or section 7510, shall be withdrawn from bonded premises except on payment of tax unless

(1) the proprietor of the bonded premises has furnished such bond (in addition to that required in section 5173) to secure payment of the tax on such spirits, under such regulations and conditions, and in such form and penal sum, as the Secretary or his delegate may prescribe; or

(2) the proprietor of a distilled spirits plant authorized to rectify or bottle distilled spirits has

(A) made application to the Secretary or his delegate to withdraw such spirits and has assumed liability at the receiving plant for payment of the tax thereon;

(B) furnished bond (in addition to any bond required by section 5173) to secure payment of the tax on such spirits, under such regulations and conditions, and in such form and penal sum, as the Secretary or his delegate may prescribe; and

(C) complied with such other requirements as the Secretary or his delegate may by regulations prescribe.

(b) RELEASE OF OTHER BONDS.-When a bond has been filed under subsection (a) and distilled spirits have been withdrawn from bonded premises thereunder, bonds of proprietors covering operations on bonded premises, and bonds given under prior provisions of internal revenue law to cover similar operations, shall no longer cover liability for payment of the tax on such spirits.

SEC. 5175. EXPORT BONDS.

(a) REQUIREMENTS.-No distilled spirits shall be withdrawn from bonded premises for exportation without payment of tax unless the exporter has furnished bond to cover such withdrawal, under such regulations and conditions, and in such form and penal sum, as the Secretary or his delegate may prescribe.

(b) EXCEPTION.-In case of distilled spirits withdrawn for exportation without payment of tax on application of the proprietor of bonded premises, the bond of such proprietor covering such bonded premises shall cover such exportation and subsection (a) shall not be applicable.

(c) CANCELLATION OR CREDIT OF EXPORT BONDS.-The bonds given under subsection (a) shall be cancelled or credited and the bonds liable under subsection (b) credited on the submission of such evidence, records, and certification indicating exportation as the Secretary or his delegate may by regulations prescribe.

SEC. 5176. NEW OR RENEWED BONDS.

(a) GENERAL.-New bonds shall be required under sections 5173, 5174, and 5175 in case of insolvency or removal of any surety, and may, at the discretion of the Secretary or his delegate, be required in any other contingency affecting the validity or impairing the efficiency of such bond.

(b) BONDED WAREHOUSEMAN'S BONDS.-In case the proprietor of a distilled spirits plant fails or refuses

(1) to give a warehouseman's bond required under section 5173 (c), or to renew the same, and neglects to immediately withdraw the spirits and pay the tax thereon; or

(2) to withdraw any spirits from storage on bonded premises before the expiration of the time limited in the bond and, except as otherwise provided by law, pay the tax thereon; the Secretary or his delegate shall proceed to collect the tax.

SEC. 5177. OTHER PROVISIONS RELATING TO BONDS.

(a) GENERAL PROVISIONS RELATING TO BONDS.-The provisions of section 5551 shall be applicable to the bonds required by or given under sections 5173, 5174, and 5175.

(b) CROSS REFERENCES.

(1) For deposit of United States bonds or notes in lieu of sureties, see 6 U. S. C. 15.

(2) For penalty and forfeiture for failure or refusal to give bond, or for giving false, forged, or fraudulent bond, or for carrying on the business of a distiller without giving bond, see sections 5601 (a) (4), 5601 (a) (5), 5601 (b) (2), and 5615 (3).

SEC. 5178. PREMISES OF DISTILLED SPIRITS PLANTS.

(a) LOCATION, CONSTRUCTION, AND ARRANGEMENT.(1) GENERAL.

(A) The premises of a distilled spirits plant shall be as described in the application required by section 5171 (a). The Secretary or his delegate shall prescribe such regulations relating to the location, construction, arrangement, and protection of distilled spirits plants as he deems necessary to facilitate inspection and afford adequate security to the revenue.

(B) No distilled spirits plant for the production of distilled spirits shall be located in any dwelling house, in any shed, yard, or inclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is made or produced, or liquors of any description are retailed, or on premises where any other business is carried on (except when authorized under subsection (b)).

(C) Notwithstanding any other provision of this chapter relating to distilled spirits plants the Secretary or his delegate may approve the location, construction, arrangement, and method of operation of any establishment which was qualified to operate on the date preceding the effective date of this section if he deems that such location, construction, arrangement, and method of operation will afford adequate security to the revenue. (2) PRODUCTION FACILITIES.

(A) Any person establishing a distilled spirits plant may, as described in his application for registration, provide facilities which may be used for the production of distilled spirits from any source or substance.

(B) The distilling system shall be continuous and closed at all points where potable or readily recoverable spirits are present and the distilling apparatus shall be so designed and constructed and so connected as to prevent the unauthorized removal of such spirits prior to their production gauge.