**wwwBUREAU OF ALCOHOL, TOBACCO AND FIREARMS**

**Alcohol & Tobacco**

**Office of Alcohol and Tobacco**

# Three Convicted of Alcohol- Tax Evasion

*By Tami Light (202) 927-3580*

Deepak Kumar, 41; Miguel Delgado, 42; and Jose Luis Bermudez, 58, were
found guilty of conspiracy to defraud the United States by evading
excise taxes on distilled spirits. The defendants operated a
sophisticated scheme which began with ordering 26,000 cases of tax-free
alcohol from a U.S. producer, exporting the alcohol to Honduras,
re-importing the same alcohol to a bonded warehouse in Miami allegedly
for re-exportation to Guatemala and Venezuela, and then ended with the
diversion of the alcohol to Buffalo, New York, where it was sold within
the United States. Approximately \$800,000 in Federal excise taxes was
evaded as a result of this scheme. The men are scheduled to be sentenced
on June 25, 2001. They face a maximum of five years in prison each on at
least 20 counts of conviction. These convictions send a strong message
that those who seek to evade taxes on alcohol and unlawfully profit from
not paying those taxes will be vigorously prosecuted. 

# ![](media/image1.png){width="1.2in" height="0.6in"}National Craft Brewers Conference 

*By Jeannette Compton (202) 927-8130*

Representatives from the Office of Alcohol and Tobacco and the Seattle
Field Division attended the National Craft Brewers Conference and
BrewExpo America held in Portland, Oregon, April 5-7, 2001. The ATF
booth was staffed by Specialist Di-Anne Fletcher of the Market
Compliance Branch, Roger Bowling, Chief, National Revenue Center, and
Inspector Bernie Kipp. Susan Stewart, Chief, Alcohol Labeling and
Formulation Division made a presentation to approximately 40 craft
brewers at their national convention. The presentation covered the
basics of malt beverage labeling, statement of process requirements, and
proposed Federal labeling initiatives. 

# Offer-in-Compromise 

*By Jeannette Compton (202) 927-8130*

The Director, Industry Operations, New York Field Division, accepted an
Offer-in-Compromise (OIC) of \$300,000 from Diamond Hong, Inc.,
Brooklyn, New York. Diamond Hong, Inc. caused the importation, into the
United States, of distilled spirits that did not contain the required
Government Warning statement on the labels. The proprietor obtained the
distilled spirits through an affiliate company. In addition to the OIC,
Diamond Hong, Inc. served a 45-day suspension. 

# ![](media/image2.wmf)Vit Area Public Reading File 

*By Nancy Sutton (415) 744-9420*

The Regulations Division is issuing a General Notice announcing that
copies of the comments generated by California Coast viticultural area
Notice of Proposed Rulemaking (NPRM) will be available for public
viewing in San Francisco, CA, until the rulemaking process is complete.
The California Coast proposed area covers approximately 22,000 square
miles of predominantly California coastline area, from Mexico to north
of San Francisco in Mendocino County, and encompasses 67 ATF-approved
viticultural areas. The NPRM comment period closes April 25, 2001, and
131 letters have been received as of April 10, 2001, with a wide
majority opposing the petition.

Viewing of the petition, the proposed regulations, the appropriate maps,
and any written, e-mail or fax comments received is available through
Specialist Nancy Sutton (415-744-9420) at 221 Main Street, 11^th^ Floor,
San Francisco, CA. The comments, only, are also available during normal
business hours at the ATF Reading Room in Washington, DC.

The San Francisco ATF office does not have comments related to any other
ATF notices. 

# Temporary Rule 

*By Robert Ruhf (202) 927-8210*

ATF published a temporary rule (T.D. ATF-444, 66 FR 13849) on March 8,
2001. This rule eliminates ATF on-site supervision of tobacco products
and cigarette papers and tubes of Puerto Rican manufacture that are
shipped from Puerto Rico to the United States and related ATF forms.
Specifically, this rule eliminates the requirements that persons who
ship such articles notify ATF prior to the shipment. It also eliminated
the requirement that an ATF officer inspects, certifies that the amount
of tax on such articles has been calculated correctly for, and releases
each shipment. As a result, ATF eliminated four forms. However, this
rule requires that persons who ship such articles maintain records. ATF
required these records so that the amount of tax is calculated and
recorded for audit and examination. ATF also published a notice of
proposed rulemaking (Notice No. 912, 66 FR 13864). This notice invites
comments on this rule by May 7, 2000. 

# 

# Re-Opening of Comment Period 

*By Wanda Burgraff and Lynne Gittes (202) 927-8140*

We reopened the comment period on the proposed revision of the COLA
form, "Application for Certification/Exemption of Label/Bottle
Approval," ATF F 5100.31.

As highlighted in our original notice, we are proposing only minor
revisions to the front of the COLA form. The wording of Items 7, 16 and
17 is slightly modified for clarification purposes.

Our draft of the back of the COLA form, however, differs dramatically
from the current COLA form. The instructions for completing the form and
conditions of approval are restructured. The conditions under which
approved labels may be modified without submission of a new COLA
application are outlined in chart form. The single-most significant
proposed revision is the allowance to add, delete or change any
nonmandatory label information without submission of a new COLA
application.

Notice of the reopening of the comment period for our proposed revision
was published in the Federal Register on April 10, 2001. To request
copies of the notice and draft revised form, contact the Alcohol
Labeling and Formulation Division (ALFD) Customer Service Desk at (202)
927-8140 or toll free at 1-866-927-2533. If you would like to comment on
the form, please address your comments in writing to Bureau of Alcohol,
Tobacco and Firearms, ATTN: Linda Barnes, 650 Massachusetts Avenue, NW.,
Washington, DC 20226. Written comments must be received before July 9,
2001, to assure consideration. 

# ![](media/image3.wmf)U.S./European Union Wine Negotiations Continue 

*By the Robert White (202) 927-8100 and Robert Tobiassen (202) 927-7772*

For the past several years the United States and the European Union (EU)
have been engaged in negotiations to improve wine trade. The U.S.
delegation to these negotiations is chaired by the Office of the United
States Trade Representative (USTR). USTR receives technical assistance
from several Government agencies including the Bureau of Alcohol,
Tobacco and Firearms. The most recent negotiation was held in
Washington, D.C., on February 20-21, 2001.

Under EU law, only wine that is made in accordance with EU requirements
is eligible to be sold in the EU market. Because the U.S. industry uses
other practices in addition to those approved in the EU, a substantial
amount of U.S. wine cannot be sold in the EU. Wine made in accordance
with EU practices or wine for which the EU has granted a derogation are
permitted into the EU. In these negotiations the U.S. is seeking a
mutual acceptance arrangement in which both sides recognize the
respective differences of their winemaking practices but will not use
those differences to prevent imports from the other unless a genuine
issue of health is raised. To date, the U.S. has not excluded any EU
wine because of the practices used to make it. The EU's main interest in
the negotiations is to have the U.S., through its labeling regime, stop
what the EU considers to be the misuse of certain geographically related
terms which are allowed by U.S. statute as semi-generic names. These
names include Champagne and Burgundy, just to name a couple. The EU is
also seeking protection over what it calls traditional terms related to
the style and character of wine.

Other topics discussed during the negotiations included additional State
requirements, simplifying import certification procedures, pesticide
residue limits, recent developments in the wine sector, biotech vines,
EU wine reform, tariffs, subsidies, and U.S./EU cooperation.

At the end of the two days of negotiations, both sides agreed that it
had been a useful exchange of information and that each side would give
serious consideration to the ideas expressed by the other . 

# ![](media/image4.png)Red Mountain Viticultural Area Established

*By Jennifer Berry (716) 551-4048*

On April 10, 2001, a Treasury Decision establishing the Red Mountain
viticultural area was published in the Federal Register. Red Mountain is
located in Benton County, Washington, and entirely within the existing
Yakima Valley viticultural area. This viticultural area is the result of
a petition filed by Mr. Lorne Jacobson of Hedges Cellars, Benton City,
Washington. Red Mountain is Washington\'s fifth and smallest
viticultural area, containing approximately 4,040 acres. The final rule
will become effective on June 11, 2001. 