Rev. Rul. 58-450

Advice has been requested whether neutral spirits of the same season of production mingled in a warehouse storage tank, or transferred between warehouse storage tanks covered by a single Form 1520, Report of Spirits Gauged, involving two or more original entry dates, may be given the original entry date of the oldest spirits so mingled or transferred.

Section 225.377 of the Regulation relating to the Warehousing of Distilled Spirits makes provision for the mingling of distilled spirits, including neutral spirits, within specified limitations. Section 225.412 of the regulations provides that where distilled spirits are deposited in a warehouse storage tank on different dates, each lot so deposited and mingled shall retain its date of original entry for the purpose of determining the period of storage in bond and withdrawals shall be considered to be made on a first-in first-out basis.

Section 225.1171 of the regulations provides that the Director, Alcohol and Tobacco Tax Division, may approve methods of operation other than those provided for in the regulations where it is shown that variations from the requirements are necessary, will not hinder the effective administration thereof, will not jeopardize the revenue, and where such variations are not contrary to any provisions of law.

While the recording of only the date of the oldest neutral spirits contained in a storage tank or transferred between storage tanks might advance the ultimate withdrawal date of part of the spirits as much as six months, the procedure would result in considerable simplification of the records, thus providing advantageous both to the Government and the industry. It is held that such procedure may be permitted under section 225.1171 of the regulations.

Accordingly, where neutral spirits are mingled in a warehouse storage tank, or transferred between warehouse storage tanks pursuant to a single Form 1520, and involve two or more original entry dates, the original entry date of the oldest spirits included may be used for all of the neutral spirits so mingled or transferred, provided the spirits so combined are limited to spirits of the same season of production. However, before such procedure may be adopted, the warehouseman must make application under section 225.1172 of the regulations in view of the requirements of section 225.412 thereof. In addition, once the authority is obtained by the warehouseman to vary the requirements, a specific request must be made on Form 2323, Consolidation of Packaged Distilled Spirits, appropriately modified, in respect to each such mingling of neutral spirits, for approval by the storekeeper-gauger. For the procedure applicable to distilled spirits other than neutral spirits see Revenue Ruling 58-208, C.B. 1958-1, 603.