Conduct Of Business Of Wholesalers

(1) Wholesaler Accountable for Inventory; Methods of Disposition of Alcoholic Beverage Limited. A wholesaler is strictly accountable for his inventory which he may deplete in the following manners only: (a) Sales to a licensed retailer and to no other person and each sale and delivery must be covered by an invoice. (b) Wholesalers may deplete inventories for personal or training use, for purposes of contributing to a charitable organization, for marketing, or for use at educational seminars held pursuant to Rule 0100-03-.11 or held for the benefit of retailer customers of the wholesaler. The wholesaler shall retain records of all such withdrawals showing the amount of inventory withdrawn, the purpose of the withdrawal and the employee responsible for such withdrawal. These records shall be retained in accordance with Rule 0100-03-.13(1). (c) Broken and deteriorated merchandise (method of handling set forth in Rule 0100-03- .14(3)). (d) Courtesy sales from one wholesaler to another within the state. (e) Returned merchandise to the manufacturer or importer. (2) Consignment and Returns. (a) No wholesaler shall sell and no retailer shall accept any alcoholic beverage on consignment, or upon condition, or with the privilege of return, or on any condition other than a bona fide sale, except as may be permitted pursuant to Chapter 0100-06. (b) Novelty containers, commonly known as Christmas decanters, must be accepted back upon request in exchange for similar quantity of alcoholic beverages of the same brand and proof in conventional containers by the wholesaler from the retailer and by the manufacturer from the wholesaler. Such requests shall not be submitted before January 15 next after the Christmas season for which such decanters were delivered. (3) Breakage and Deteriorated Merchandise. The following procedure shall be followed in handling and accounting for broken or deteriorated merchandise: (a) Wholesalers shall return broken bottles or deteriorated merchandise from the retailer involved to his warehouse before replacing same with the retailer. (b) Replacement shall be listed on the wholesaler’s standard invoice and designated whether breakage or deteriorated merchandise. (c) The wholesaler shall prepare a standard invoice covering the breakage or deteriorated merchandise within his own stock on the date it is broken or the deteriorated merchandise is removed from his inventory. (d) No later than the fifth (5th) day of the month each wholesaler shall prepare from invoices of the previous month a complete list of breakage and deteriorated LOCAL OPTION LIQUOR RULES CHAPTER 0100-03 merchandise. The list shall be prepared in triplicate and shall include the invoice number, retail license number (or wholesaler’s license number), brand, and size. (e) An agent of the Tennessee Alcoholic Beverage Commission shall use this list in checking and destroying broken bottles, and checking the deteriorated merchandise which he shall mark as unsaleable. The agent will certify all three (3) copies of the list and forward one (1) copy to the Commission. The wholesaler shall mail another copy to the Miscellaneous Tax Division of the Department of Revenue and retain the third (3rd) as a part of its records. (f) After checking and marking, the wholesaler may dispose of the deteriorated merchandise without regard to the limitation established in Rule 0100-03-.16(1)(b) provided, however, the wholesaler will incur tax liability at the same time all such unsaleable alcoholic beverages are removed from inventory and not destroyed. (4) Wholesaler Assistance at Special Occasion Events. A wholesaler or employee thereof may participate in, assist, and serve alcoholic beverages on behalf of a holder of special occasion permits issued pursuant to T.C.A. § 57-4-101(g).