The Supreme Court has turned down an appeal by cut-price petrol retailer Gull seeking to overturn a decision that would see it pay higher excise duty on its locally blended butane/motor spirit mix.
Chief Justice Sian Elias and Justices John McGrath, William Young, Susan Glazebrook and Thomas Gault today rejected Terminals (NZ) Ltd's assertion that blending of butane with motor spirit didn't constitute manufacturing as defined by the Customs and Excise Act 1996, meaning the sister company of Gull New Zealand faces an unpaid duty bill of some $23 million.
The blending process meant Terminals was able to add 5 litres of butane to 100L of motor spirit, creating 105L of motor spirit. Because butane faces a 10 cent duty rate per litre, compared to the 48 cents per litre rate on motor spirit, the Gull unit was effectively paying 38 cents per litre on the additional motor spirit created by the mixing process.
"The process of blending butane with motor spirit conducted by Terminals leads to the production of motor spirit by that blending process,'' the judgment said.
"It therefore falls within the definition of manufacture in the Act.''
Terminals was also ordered to pay costs of $25,000 and disbursements.
Customs lost its argument in the High Court, later winning in the Court of Appeal in December last year.