Rev. Rul. 59-23

Advice has been requested whether Revenue Ruling 58-336, C.B. 1958-1, 588, extends to the use of alcohol in the production of vodka and for further clarification of the processing and shipment of vodka.

It is held Revenue Ruling 58-336, that vodka may be produced by the extractive distillation process under authority of section 220.55-4(c) of the Regulations relating to the Production of Distilled Spirits. It is also held that vodka may be produced by a distiller or a rectified by the treatment of neutral spirits of 110 degrees of proof with one ounce of activated carbon for each 100 gallons of reduced spirits processed provided the neutral spirits, prior to reduction in proof, meet specified conditions.

While the Revenue Ruling refers only to neutral spirits, it does not exclude the use of alcohol, produced at an industrial alcohol plant, by rectifiers in the production of vodka, provided that prior to treatment with activated carbon the alcohol intended for use substantially meets the specifications set forth in the Ruling.

Revenue Ruling 55-114, C.B. 1955-1, 573, provides that alcohol transferred to a registered distillery pursuant to section 5217 of the Internal Revenue Code of 1954, relating to national emergency transfers of distilled spirits, may not be redistilled or otherwise used in the production of vodka at a registered distillery as spirits so transferred may not be redistilled or reduced below the eligible proof (160 degrees) necessary for withdrawal for national defense purposes. Thus, the transfer of alcohol in bond to a registered distillery for the production of vodka by any process is not authorized.

The manufacture of vodka at a registered distillery by the extractive distillation process pursuant to section 220.554 of the Regulations relating to Production of Distilled Spirits must be one complete operation as provided in Revenue Ruling 55-114, and the final product must conform with the standards for vodka established by section 21(a), Class 1, of the Regulations relating to the Labeling and Advertising of Distilled Spirits. Since such Ruling and the standards of identity established for vodka require reduction to not more than 110 degrees proof and not less than 80 degress proof, the spirits may not be shipped prior to such reduction in proof to rectifying plants (or to taxpaid bottling houses) for completion and bottling as vodka.

In manufacturing vodka by the use of activated carbon, the time of contact of the activated carbon with the reduced spirits is left to the discretion of the producer.