18 December 2012

Customs welcomes Court decision

The New Zealand Customs Service today welcomed the judgment by the Court of Appeal 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.

Deputy Comptroller, John Secker, said that the Court’s decision is important because it endorses Customs’ stance that the entire volume of motor spirit produced by blending it with butane is liable for the motor spirit rate of excise duty.

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.

“We are pleased to have clarification on this complex legal issue. In accordance with our statutory functions we will need to make a complete assessment of the duty payable, and the credits on duty already paid, before we can confirm the total amount owed by Terminals NZ.”

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