Rev. Rul. 56-339

Advice has been requested whether distilled spirits in barrels in an internal revenue bonded warehouse may be dumped into a bulk gauging tank, gauged, and transferred to a distillery for redistillation.

Section 5194(f) of the Internal Revenue Code of 1954 authorizes the transfer of distilled spirits of any proof, in approved containers, from an internal revenue bonded warehouse to a distillery for redistillation. Section 225.7 of the Regulations relating to the Warehousing of Distilled Spirits defines an `approved container' as including tank cars and tank trucks, unless specifically excluded. The use of tank cars or tank trucks for transporting spirits of any proof from bulk gauging tanks in an internal revenue bonded warehouse for redistillation is not specifically excluded.

Accordingly, it is held that distilled spirits of any proof may be dumped from barrels in an internal revenue bonded warehouse into a bulk gauging tank, gauged therein, and withdrawn for transfer by tank car or tank truck to a distillery for redistillation, subject to the applicable provisions of the Regulations relating to the Production of Distilled Spirits, the Production of Brandy, and the Warehousing of Distilled Spirits.