BIR Ruling No. 088-83

May 18, 1983 BIR RULING NO. 088-83 Gentlemen : This refers to your letter dated December 15, 1982 requesting a ruling as to whether the storage in oak barrels located within your distillery premises of alcohol produced by you constitute rectification within the contemplation of Section 187(c) of the Tax Code. cdti It is represented that Central Azucarera de la Carlota is a licensed distiller of 186 proof ethyl alcohol at La Carlota, Negros Occidental (L2648-Co270-A-8); and that it stores its 168 proof alcohol in vertical steel storage tanks and in oak barrels. Verification conducted by the Alcohol Tax Division and the result of the laboratory analysis performed on the alcohol samples taken from the oak barrels show that there is no concentration of the alcohol nor did purification take place during the period of storage in the oak barrels; that there were chemical changes, however, that occurred, such as: the acidity has been reduced, the characteristic molasses smell has been removed; and it acquired a yellowish color not originally present in the alcohol; and that both physical and chemical changes took place during the period when the alcohol was in storage in the oak barrel characteristic of the process of "aging" which is done to the alcohol for the purpose of improving its quality mainly for use in the manufacture of intoxicating beverages. In reply, please be informed that based on the foregoing facts, this Office is of the opinion, as it hereby holds, that you are not a rectifier as defined in Section 187(c) of the Tax Code, as amended, which comprises every person who rectifies, purifies, or refines distilled spirits or wines by any process other than by original and continuous distillation from mash, wort, wash, sap, or syrup through continuous closed vessels and pipes until the manufacture thereof is complete. In the instant case, the physical and chemical changes which took place naturally on the alcohol stored in the oak barrel is not rectifying, purifying or refining as contemplated under Section 187(c) of the Tax Code. In this connection, it may be stated that since there is no rectification involved in this case, Section 141 of the Tax Code is not applicable. Very truly yours, (SGD.) ROMULO M. VILLA Acting Commissioner Bureau of Internal Revenue