(1) Should inspection reveal that a manufacturer is not manufacturing units according to plans approved by the bureau, and such manufacturer, after having been served with a notice setting forth in what respect the provisions of these rules have been violated continues to manufacture units in violation of these rules, applications for new insignia shall be denied and the insignia previously issued shall be confiscated after a proper hearing as provided for in ARM 24.301.577. Upon satisfactory proof of compliance such manufacturer may resubmit an application for insignia.