Rev. Rul. 58-30

Advice has been requested whether the construction, by a distiller, of a still from a number of sections of a beer still and a number of sections of a rectifying column subjects the distiller to liability for the special (occupational and commodity) taxes as a manufacturer of stills.

In the instant case, the distiller combined several sections of a beer still with sections of a rectifying column to create a beer still intended for use in distilling. Although all of the parts used in constructing the still were taken from units originally purchased from the same company, they are parts of two entirely different units, i.e. , parts of a beer still and parts of a rectifying column. There is no evidence of payment of the commodity taxes in connection with any of the separate parts used in constructing the still.

Section 5101 of the Internal Revenue Code of 1954 provides a special occupational tax and a special commodity tax on the manufacture of `each still or worm for distilling.' Section 5102 thereof and section 196.25 of the Regulations relating to Stills define a manufacturer of stills as `any person who manufactures any still or worm to be used in distilling.'

Section 196.27 of the regulations provides that if separate parts of a complete stillor worm or condenser, of any kind, are furnished by the same manufacturer to a distiller, or other person, who assembles the same into a still or worm or condenser for distilling, the manufacturer of the parts will incur liability for the special (occupational and commodity) taxes imposed upon manufacturers of stills. Section 196.28 thereof provides that if a distiller or other person procures materials or apparatus, which are not separately subject to the tax, and converts them into a still or worm or condenser for distilling, he (the distiller) will incur liability for the special taxes.

Section 220.790 of the Regulations relating to the Production of Distilled Spirits provides, among other things, that whenever distillers manufacture or reconstruct stills or worms, they must comply with the Regulations relating to Stills governing the payment of special and commodity taxes.

It is held that where a distiller constructs a completely new or different still from various parts of distilling apparatus not separately subject to tax, with the intent that the still is to be used for distilling, as in the instant case, the distiller incurs liability for the special (occupational and commodity) taxes imposed upon manufacturers of stills. Since the completed still contains parts of entirely separate units, although such units were originally purchased from the same company, the provisions of section 196.27 are not applicable.