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Drawback Tutorial

TTB Actions on Formulas 

Approved: Unfit for beverage purposes.  The product is eligible for the drawback of taxes paid.  The flavor can be used inside or outside the U.S., and an alcoholic beverage manufacturer can claim the 5010 tax credit on the flavor.

No Action: Unfit for beverage purposes.  There is no eligible ethanol directly added.  However, the product may contain ethanol.  The 5010 tax credit can be claimed on the flavor by the beverage manufacturer.

Fit for beverage purposes: 

  • Domestically Produced Products: The product is DISAPPROVED.  It is not eligible for the drawback of taxes paid.  It can be used only as an in-house intermediate in a product that is subsequently approved.  It cannot be sold.
  • Product Produced Outside of U.S.: The flavor can be used in an alcoholic beverage only if the flavor and beverage are both manufactured outside the U.S.  However, the 5010 tax credit cannot be claimed by a beverage manufacturer on the portion of the disapproved flavor.
Page last reviewed/updated: 09/04/2012