Rev. Ruling 57-292
Purchase of Taxpaid Rum in Bulk by Wholesale Liquor Dealer
Advice has been requested whether a wholesale liquor dealer may purchase taxpaid rum in bulk to fill an order placed with him by industrial user.
Section 3.10 of the Regulations relating to Bulk Sales and Bottling of Distilled Spirits provides that it is unlawful for any person to sell, offer to sell, contract to sell, or otherwise dispose of distilled spirits in bulk, for nonindustrial use, except for export or to a distiller, warehouseman, rectifier, proprietor of a class 8 customs bonded warehouse, or to Governmental agencies of the United States. Section 3.25 of such regulations provides that distillers, rectifiers, and other permittees engaged in the sale or nonindustrial use shall not sell or otherwise dispose of distilled spirits in bulk (other than alcohol) for industrial use, unless such distilled spirits are shipped or delivered directly to the industrial user thereof.
Section 2.12 of the Regulations relating to the Nonindustrial Use of Distilled Spirits and Wine provides, in part, that the use of distilled spirits or wine in the manufacture of flavoring extracts, syrups, or food products is regarded as "industrial" and will be excluded from any application of the term "nonindustrial use" as used in such regulations.
In view of the above regulations, it is held that a wholesale liquor dealer may purchase rum in bulk (in containers having a capacity in excess of one wine gallon) for sale for industrial use, provided the rum is shipped or delivered directly to the industrial user thereof by the warehouseman, distiller, or rectifier. Since a wholesaler may not receive distilled spirits in bulk at his premises, except alcohol for resale for industrial use, either in its original containers or after repackaging in containers in excess of one wine gallon and less than five wine gallons, he may not receive the bulk rum in question on his premises for redelivery to the industrial user.
27 U.S.C. 206; 27 CFR 3.10