ATF Ruling 76-13
The Bureau has been asked whether a person engaged in the business of either importing or purchasing for resale at wholesale a malt beverage containing less than one-half of one percent alcohol by volume would be exempt from the permit requirements of section 3 of the Federal Alcohol Administration Act (27 U.S.C. 203). In addition, the Bureau has been asked whether such a beverage would also be exempt from the labeling and advertising requirements of section 5 of the Act (27 U.S.C. 205(e) and (f)).
Section 203 specifically makes it unlawful, except pursuant to a basic permit, for any person to engage in the business of importing into the United States, or purchasing for resale at wholesale, malt beverages.
Section 205(e) and (f) makes it unlawful to sell, etc., "malt beverages in bottles unless such products are bottled, packaged and labeled in conformity with ... regulations...," and to publish, etc., "... any advertisement of malt beverages...unless such advertisement is in conformity with...regulations..." However, the penultimate paragraph of section 205 provides, in effect, that with respect to malt beverages, the labeling and advertising provisions shall apply only to the extent that the State law imposes similar requirements.
Section 211(7) and 27 CFR 7.10(d) define the term malt beverage to mean a beverage made by the alcoholic fermentation of an infusion or decoction, or combination of both, in potable brewing water, of malted barley with hops, or their parts, or their products, and with or without other malted cereals, and with or without the addition of unmalted or prepared cereals, other carbohydrates or products prepared therefrom, and with or without the addition of carbon dioxide, and with or without other wholesome products suitable for human food consumption.
Section 211(7) contains no reference to a minimum level of alcoholic content before a product is considered a malt beverage. The legislative history of the Act clearly shows that Congress intentionally omitted any minimum alcoholic content from the definition in order to bring all malt beverages within the coverage of the statute, regardless of alcoholic content. The report of the Committee on Ways and Means on the Federal Alcohol Control Bill stated: "The definition of malt beverages...is a technical one designed to cover the beverage products of the brewing industry and includes such products regardless of their alcoholic content." H.R. Rep. No. 1542, on H.R. 8870, 74th Cong., 1st Sess. 16(1935).
Accordingly, the Bureau has taken the position that the term malt beverage as used in the FAA Act is a beverage made by alcoholic fermentation from specific materials and includes cereal beverages or "Near Beer" regardless of alcoholic content. Rev. Rul. 57-322, 1957-2 C.B. 930 (Internal Revenue), held that the term "Near Beer" may be used in the labeling and advertising of malt beverages containing less than one-half of one percent of alcohol by volume. However, both words must be printed to conform to the labeling provisions of the regulations relating to the labeling and advertising of malt beverages.
Held, a person who engages in the business of either importing or purchasing for resale at wholesale a malt beverage containing less than one-half of one percent of alcohol by volume is subject to the permit requirements of the Federal Alcohol Administration Act. Accordingly, importers and wholesalers of malt beverages and "Near Beer" produced by a process involving alcoholic fermentation, containing less than one-half of one percent of alcohol by volume must obtain appropriate permits under the Act. Furthermore, to the extent that the State law imposes similar requirements, the labeling and advertising of such products must also conform to the requirements of sections 205(e) and (f) and the regulations thereunder.
27 CFR 7.10.