Rev. Ruling 70-388
The Internal Revenue Service has been asked if distilling material may be used on bonded premises of distilled spirits plants in the manufacture of a cattle feed which will then be removed from bonded premises without payment of tax. The manufacture of such product would consist of the addition of chemicals which would render it unfit for distillation.
Section 5222 on the Internal Revenue code of 1954 states in part that no mash, wort, or wash fit for distillation or for the production of distilled spirits shall be removed from bonded premises before being distilled, except as authorized by the Secretary or his delegate.
Under section 5178 of the Code, as implemented in 26 CFR 201.67, the Director may authorize the carrying on of such other businesses on premises of plants as he finds will not jeopardize the revenue, hinder effective administration or be contrary to law.
Held, the use of distilling material in the manufacture of a product such as cattle feed on bonded premises may be authorized by the Director under 26 CFR 201.67 if he finds that such operation will render the distilling material unfit for the production of distilled spirits.
Distilled spirits plant proprietors desiring to avail themselves of the authority extended by this Revenue Ruling should file application in triplicate, for such purpose. Such application should be addressed to the Director and submitted through the Assistant Regional Commissioner of the applicant's region.
26 U.S.C. 5178; 27 CFR 201.67