Rev. Rul. 56-280

Section 5131 of the Internal Revenue Code of 1954 provides, in part, that distilled spirits used in the manufacture or production of medicines, medicinal preparations, food products, flavors, or flavoring extracts, which are unfit for beverage purposes, are subject to drawback. Held, food colors manufactured with taxpaid distilled spirits are not considered to be `food products, flavors, or flavoring extracts.' Accordingly, drawback is not allowable on the distilled spirits used in the manufacture of food colors when they are sold as such. However, if the manufacturer produces food colors and uses such colors in the manufacture of food products, he may file claim for drawback on the distilled spirits which are contained contained in the food color at the time the color is used in the manufacture of the food product.