Before EVANS and KERNER, Circuit Judges, and BRIGGLE, District Judge.
The trial court upheld plaintiff's right to recover $7,495.80 from the Government, on distilled spirits used in 1943, as "drawbacks," because the eggnog product it manufactured was a "food product" and not a "beverage," under Section 3250, Internal Revenue Code, as amended by Section 602(f) of the Revenue Act of 1942. This Section provides:
"Any person using distilled spirits produced in a domestic registered distillery or in industrial alcohol plant and fully tax-paid in the manufacture or production of medicines, medicinal preparations, food products, flavors, or flavoring extracts which are unfit for beverage purposes and are sold * * * for use for other than beverage purposes, upon payment of a special tax per annum, shall be eligible for drawback * * *." 26 U.S.C.A. Int. Rev. Code, § 3250.
It is apparent that the above statute imposes upon a claimant the burden of establishing (a) that the product is "unfit for beverage purposes," and (b) it was "sold * * * for use other than for beverage purposes."
Treasury Regulations 15, Sec. 190.5 provides:
"The following products are considered as meeting the requirements for exemption from special commodity taxes: * * *
"(d) Flavoring extracts * * *
"(h) Brandied Fruits * * *
"(i) Food products. - Food products such as mincemeat, plum pudding, and fruit cake where only sufficient liquor is used for flavoring and preserving; and ice cream and ices where only sufficient liquor is used for flavoring purposes."
Plaintiff's eggnog product was made of this formula: in each 200 gallons there were 750 pounds of egg material; 20 gallons of milk; 496 pounds of sugar and dextrose; 65 gallons ...