Customs welcomes Court decision on blended petrol

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Customs welcomes Court decision on blended petrol

The New Zealand Customs Service today welcomed the judgment by the Supreme Court that duty is payable on butane blended with petrol. The case involved Gull/Terminals NZ.

The Court has ruled that the process of blending butane with petrol constitutes ‘manufacture’ for the purposes of the Customs and Excise Act 1996 and is subject to the duty applicable to motor spirit.

Group Manager Legal Services, Peter Taylor, said that the Court’s decision endorses Customs’ stance that the process of blending motor spirit is a manufacturing process and the entire volume produced is liable for excise duty.

“We are pleased to have clarification on this complex legal issue, and will now issue an assessment of the duty payable, and the credits on duty already paid, to Terminals NZ.”

In this case adding butane increased the volume of petrol by an average of five per cent, which over time has resulted in the production of large quantities of additional petrol, and a loss of revenue to the government.

Customs argued that Terminals NZ is not paying the appropriate duty on the butane component that has been added to the motor spirit, whilst Terminals NZ had contended that adding butane was not a manufacturing process and they had no liability.

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