TTB Issues Guidance for Retention of COLAs by Alcohol Wholesalers: (1/05/2006)
It has come to our attention recently that certain alcohol beverage wholesalers believe that TTB requires them to maintain copies of Certificates of Label Approval (COLAs) for all products that they maintain on their premises. 27 CFR, Part 4.30 (wine), 5.51 (distilled spirits), and 7.31 (malt beverages), outline label approval and release requirements. TTB does not require wholesalers to maintain this type of information. However, when the wholesaler purchases product directly from a foreign supplier and is the holder of the COLA for this imported product ( i.e., the wholesaler/importer's name is on the COLA for that product), this type of wholesaler/importer must maintain a copy of the COLA for the imported product on its premises.
On the other hand, when a wholesaler purchases product from an importer who purchases product directly from a foreign supplier and that importer's name is on the COLA for this imported product, the wholesaler in these circumstances is not required to maintain a copy of the COLA for the imported product on its premises. Set forth below is a more detailed explanation of these matters.
Distillers, wineries, breweries and importers of alcohol products are expected to comply with the various labeling requirements set forth in the applicable parts of 27 CFR. Administrative action can be taken if violations of these requirements are disclosed during the course of a TTB field investigation. However, absent any evidence of any unlawful collusion with either the producer or importer, TTB, would not cite a wholesaler who is not the importer of the product (as defined in Revenue Ruling 71-535) for a label violation that was incurred as a result of a product purchased and shipped domestically from a producer or importer without an approved COLA.
In Revenue Ruling 71-535, TTB's predecessor, ATF, stated that the word importer means "either the holder of an importer's basic permit making the original Customs entry into the United States, or for whom such entry is made, or the holder of an importer's basic permit who is the agent, distributor, or franchise holder for the particular brand of imported alcoholic beverages and who places the order abroad."
A question is presented as to who TTB would consider to be the responsible party where a domestic wholesaler places an order with an authorized importer/COLA holder who, in turn, acquires the product from the foreign supplier and has it delivered directly to the domestic wholesaler. TTB would consider the authorized importer/COLA holder as the responsible party for purposes of any FAA Act violation, absent any evidence of unlawful collusion with the wholesaler.
Where a wholesaler contracts with an authorized importer in the situation described above, a reasonable period of time will be granted to obtain a copy of the authorized importer's COLA. The wholesaler is not required to keep a copy of this COLA on its premises. As part of TTB's inspection program, TTB may request a copy of the authorized importer's COLA from the wholesaler for the purpose of confirming that the COLA covers the imported product. A reasonable period of time to obtain a copy of the COLA will depend upon the circumstances and may range up to a few days. A wholesaler that warehouses imported product purchased from an authorized importer in a Customs bonded warehouse (CBW) should conduct spot checks of that product before withdrawal from the CBW to ensure, for example, that the COLA for that product still is in effect.
If TTB samples a product where the wholesaler also is the importer (direct foreign purchase of the product by the wholesaler so that the COLA is in its name) TTB requires that a copy of the COLA be maintained by that wholesaler/importer on its premises. (See Rev. Ruling 71-535.)