Rev. Ruling 69-496

Treasury Decision 6973, C.B., 1968-2, 648, in part, revised the standard of identity for vodka by amendment of 27 CFR 5.21(a) effective December 1, 1968, and established a standard for flavored vodka by addition of paragraph (j) to 27 CFR 5.21 effective July 1, 1969.

In view of the amendments to 27 CFR 5.21, the Internal Revenue Service has reviewed current revenue rulings pertaining to vodka and flavored vodka to determine which rulings are no longer consistent with the provisions of 27 CFR 5.21, as amended. The Service has also considered the question of redesignation of eligible neutral spirits as vodka and the conditions under which bottlers may use on labels of vodka the terms "distilled by," "produced by," prepared by," or "bottled by."

Under the provisions of 26 CFR 201.517(b) relating to marks and brands to be placed on containers of distilled spirits, eligible neutral spirits may, before removal from bonded premises, be redesignated as vodka upon approval of the Assistant Regional Commissioner, Alcohol, Tobacco and Firearms. Also, vodka (under similar circumstances) may be redesignated as neutral spirits.

In view of the definition for vodka contained in 27 CFR 5.21, as amended, it has been determined that neutral spirits which are without distinctive character, aroma, taste, or color may be redesignated as vodka by the proprietor or a distilled spirits plant, after withdrawal of such spirits from bond and before the completion of the bottling thereof. Also, vodka on bottling premises may be redesignated as neutral spirits. In either case, it would not be necessary to submit Form 27-B Supplemental, Formula and Process for Rectified Products, for approval.

The labeling provisions of 27 CFR Part 5 will permit only the term "bottled by" to appear on labels of bottled vodka which, without treatment, has been so redesignated from neutral spirits. Labels carrying this legend which are covered by outstanding certificates on Form 1649, Application Form and Certificate of Label Approval, may continue to be used without further endorsement of the applicable Forms 1649, even though the formulas to which they originally related are no longer being used. A bottler who actually redistills neutral spirits in the production of vodka or who is the proprietor of the bonded production facilities where the eligible neutral spirits were distilled may use on labels the term "distilled by." A bottler who treats neutral spirits (whether or not such neutral spirits are eligible to be described as vodka) on bottling premises or on production premises (1) with a least one ounce of activated carbon for each 100 wine gallons of neutral spirits or (2) by any other approved method of purifying or refining neutral spirits for the purpose of producing vodka may indicate on labels that the vodka was "produced by" him. However, where neutral spirits are given any lesser treatment than that indicated in (1) or (2) above, the bottler may show on labels only that the vodka was "bottled by" or "prepared by" him. In such case, the term "produced by" is not authorized. In any case, treatment on bottling premises must be approved pursuant to Form 27-B Supplemental. Treatment on production premises must be described in the Statement of Process submitted on Form 2607, Registration of Distilled Spirits Plant. In addition, if two or more lots of neutral spirits (each eligible to be designated vodka without treatment) are mingled, the resultant product may be redesignated as vodka. However, such mingling would not be regarded as an act of production. On the basis of the review which has been made, the following Revenue Rulings pertaining to vodka and to flavored vodka are hereby declared obsolete:

55-594, C.B. 1955-2, 700

58-122, C.B. 1958-1, 613

58-336, C.B. 1958-1, 588

58-560, C.B. 1958-2, 958

56-207, C.B. 1956-1, 811

58-253, C.B. 1958-1, 581

58-415, C.B. 1958-2, 985

65-115, C.B. 1965-1, 581

65-122, C.B. 1965-1, 584

26 U.S.C. 5206; 27 CFR 201.517