THE COMPTROLLER OF CUSTOMS v TERMINALS (NZ) LIMITED COA CA366/2012

THE COMPTROLLER OF CUSTOMS v TERMINALS (NZ) LIMITED COA CA366/2012 [18 December 2012]IN THE COURT OF APPEAL OF NEW ZEALANDCA366/2012[2012] NZCA 598BETWEEN THE COMPTROLLER OF CUSTOMSAppellantAND TERMINALS (NZ) LIMITEDRespondentHearing: 28 and 29 August 2012Court: Arnold, Randerson and Wild JJCounsel: M S R Palmer and S Kinsler for AppellantR E Harrison QC for RespondentJudgment: 18 December 2012 at 12 noonJUDGMENT OF THE COURTA The appeal is allowed.B The parties may file a memorandum if any formal declaration is required or if any issue arises in respect of the interim order made in the High Court.C The cross-appeal is dismissed.D The respondent must pay costs to the appellant on the appeal and cross-appeal on a band A basis with usual disbursements. We certify for second counsel.___________________________________________________________________REASONS OF THE COURT(Given by Randerson J)Table of ContentsPara NoIntroduction [1]BackgroundTNZ's facility and processes [12]The constituent elements and their characteristics [16]Ethanol licences [22]The scheme of the CE Act [25]The Duties Table [40]Does the blending of butane and motor spirit amount tomanufacturing?The judgment in the High Court [44]Case law [50]Historical background [75]Legislative history of the definition of manufacturing [80]The text of the definition [88]The purpose of the CE Act [91]Conclusion on the manufacturing issue [98]The Comptroller's deemed manufacturing argument [103]TNZ's argument based on legitimate expectationFactual background [108]The Judge's findings [119]Legitimate expectation – principles [121]Conclusions on the legitimate expectation argument [153]Promissory estoppel [156]Conclusions and disposition [158]Introduction[1] The main issue in this appeal relates to a process undertaken by the respondent (TNZ) involving the addition of locally made butane to imported motor spirit. The question is whether this process amounts to the "manufacturing" of motor spirit for the purposes of the Customs and Excise Act 1996 (the CE Act). The appellant, the Comptroller of Customs, contends the process does amount to manufacturing with the consequence that TNZ ought to be paying duty at a higher rate on the full volume of motor spirit resulting from the process.[2] In broad terms, the CE Act imposes excise duties on specified categories of imported goods and on locally manufactured goods. Butane and motor spirits areboth specified goods for excise duty purposes. The issue on appeal arises because the rates of duty for butane and motor spirits are different. The rates vary from time to time but, for the purposes of simplicity, we adopt rounded rates of 10 cents per litre for butane and 48 cents per litre for motor spirit.[3] In this case, motor spirit is imported into New Zealand and excise duty is paid on it at the 48 cent rate. The butane is manufactured in New Zealand and duty paid on it at the 10 cent rate. On average, about five per cent by volume of butane is added to the motor spirit at a facility operated by TNZ at Mt Maunganui within the Port of Tauranga. The Port is a customs controlled area (CCA) under the CE Act. The total volume of the pre-existing motor spirit is increased during this process so that, for every 100 litres of the pre-existing motor spirit, the volume of the resulting product is increased to an average of 105 litres after the addition of the butane.[4] The Comptroller maintains that TNZ should be paying the higher duty rate for motor spirit on the increased volume because the process of adding the butane and mixing the two constituents amounts to the manufacturing of dutiable goods for the purposes of the CE Act. She has made a provisional assessment of the duty payable on the resulting product at 48 cents per litre but allowing a credit for the duty already paid on the two constituent goods. Using the figures we have adopted, this means that TNZ would effectively be liable for duty at 38 cents per litre (48 cents less 10 cents) on every additional litre of motor spirit resulting from the mixing process. On the example given above, there would be an addition of five litres of motor spirit.[5] TNZ's position is that no further duty is payable, submitting that manufacturing requires the production of something different from the constituent parts in order to amount to manufacturing. In this case, the goods were motor spirit before the process and remain motor spirit after it is completed. No new goods are created and the process does not therefore amount to manufacturing.[6] As a fall-back position, TNZ says that if duty is payable, then the Comptroller is breaching a legitimate expectation arising from discussions and correspondence between representatives of TNZ and the Comptroller in 2002. TNZalleges that assurances were given that duty would not be levied on the goods resulting from the process at issue. TNZ also maintains that the Comptroller is estopped from levying the duty in consequence of the alleged assurances.[7] In the High Court, Mallon J found in favour of TNZ1 on the manufacturing issue and concluded that no duty was payable. Although not strictly necessary for her decision, Mallon J found that the assurances relied upon did not give rise to a reasonable expectation that the duty would not be levied. In the circumstances, TNZ could not establish an estoppel.[8] The Comptroller now appeals against the High Court's finding on themanufacturing issue. She also raises an alternative argument that the product resulting from the mixing process is deemed to be a manufactured good by virtue of s 69(b) of the CE Act. Under that section, goods may be deemed to be manufactured if worked upon by a contractor. The Comptroller's contention is that TNZ is acontractor who worked on the goods and that manufacturing is deemed to have occurred.[9] TNZ cross-appeals against Mallon J's finding on the legitimate expectationand estoppel issues.[10] We record that the proceedings issued by TNZ were brought by way ofjudicial review of the Comptroller's provisional assessment and alternatively soughtdeclaratory relief under the Declaratory Judgments Act 1908. In the High Court, the Comptroller initially raised an objection to the suitability of judicial review and declaratory relief to resolve the issue given the dispute resolution procedures in the CE Act but, in the interests of efficiency, she did not pursue that objection. We proceed on the basis that there is no objection to the procedural vehicle adopted.[11] On 16 March 2012, Gilbert J granted interim relief restraining the Comptroller from making an assessment of excise duty and additional duties.21 Terminals (NZ) Ltd v Comptroller of Customs [2012] NZHC 1139, 25 May 2012.2 Terminals (NZ) Ltd v Comptroller of Customs [2012] NZHC 447, 16 March 2012.BackgroundTNZ's facility and processes[12] TNZ commenced business in New Zealand at Mt Maunganui in 1998. TNZ is associated with Gull New Zealand Limited, a retailer of motor spirits which commenced retail sales in New Zealand from 1999. Both companies have ownership in common. TNZ stores motor spirit, diesel and other products both for Gull and BP under contractual arrangements.[13] Initially, TNZ was the importer of motor spirit for Gull. From 1 July 2007 Gull became the importer. Currently, the importer is Mobil. The imported motor spirit arrives at Tauranga Harbour from overseas by tanker. Excise duty is paid onthe imported motor spirit in accordance with the importer's entry for those goods. The motor spirit is delivered to TNZ's facility via a pipeline directly from the vessel.[14] The butane is produced in New Zealand by OnGas as a by-product of refining petroleum. Initially, OnGas supplied the butane directly to TNZ but on 13 June 2007, TNZ assigned the supply contract to Gull. The butane continues to besupplied to TNZ's facility where it is stored in an underground storage tank. Exciseduty on the butane is paid when it is produced before it arrives at TNZ's facility.[15] TNZ's facility comprises storage tanks, pipes and pumps of various sizes andcapacities. The outlet pipes are linked to a gantry from which the various fuels are dispatched. The motor spirit at issue in this appeal is discharged into fuel tankers in the gantry area. The composition of the motor spirit varies according to customerrequirements. Within TNZ's CCA, other products are added to the motor spirit.Relevantly for present purposes, butane, ethanol or both may be added. The mixing process is regulated by computer-controlled valves and flow-metering to ensure the correct quantities are added and that the resulting product is consistent with fuel specifications. The blending of the motor spirit with the additives takes place within the pipeline systems and, subsequently, in the tankers into which the product is loaded.The constituent elements and their characteristics[16] Motor spirit is a blend of ingredients, primarily a number of liquid hydrocarbons. Butane is one of the ingredients of motor spirits and is therefore already present in the motor spirit TNZ imports. The butane later mixed with themotor spirit at TNZ's facility therefore simply increases the percentage of butane present.[17] Butane is a gas usually produced as a consequence of, or in conjunction with, oil and natural gas production. It is reduced to liquid form for transportation and storage purposes and is classified for excise duty purposes as a type of liquefied petroleum gas.[18] Ethanol (ethyl alcohol) arrives at TNZ's facility as a potable form of alcohol.As such, it is potentially subject to a higher level of excise duty but is exempt fromduty if it is "denatured". Denaturing is the process of rendering the ethanol non- potable by the addition of a small quantity of motor spirit. We refer later to the steps taken by TNZ to obtain a licence to manufacture motor spirit involving the use of ethanol.[19] The Comptroller relied upon the evidence of an expert adviser employed by the Ministry of Economic Development, Dr Vladimir Koutsaenko. His undisputed evidence is that butane is not petrol (motor spirit) and petrol is not butane. For example, their boiling points occur at different temperatures. And, as already noted, butane is a gas whereas petrol comprises mainly liquid hydrocarbons. If, say, three litres of butane is added to 100 litres of petrol, the result is 103 litres of petrol. The butane is still separately identifiable if the petrol is analysed but the three litres ofbutane becomes part of the petrol. Using Dr Koutsaenko's figures, there areapproximately three litres more of petrol at the end of the process than before.[20] Dr Koutsaenko stated that the blending of butane in petrol changes the characteristics of the resulting product:12. Similarly the 100 litres of petrol to which the 3 litres of butane has been added is not the same petrol as it was before the mixing. ItsVapour Pressure, for example, will have changed and I would also expect there to be a slight change in the Percentage Volume Evaporated at 70°C. The expressions Vapour Pressure and Percentage Volume Evaporated are terms used in the Regulations. The Regulations provide that the Vapour Pressure of petrol must vary from season to season and there are regional differences required also.13. In addition the blending of butane with petrol can result in the Research Octane Number and/or Motor Octane Number of the petrol changing. For example, the addition of butane to petrol with a Research Octane Number of 91 would most likely result in an increase in the Research Octane Number.[21] The regulations Dr Koutsaenko refers to are the Engine Fuel Specifications Regulations 2011 to which we later refer.Ethanol licences[22] In October 2003, TNZ sought and obtained a licence to store and denature ethanol. The licence specified that it was issued for the purpose of manufacturing goods specified in Part A of the third schedule to the CE Act (the predecessor to the current Duties Table). Amendments were made to the licence in 2007 but it remained for the purpose of denaturing ethanol. In 2009, the licence was again amended to authorise the manufacture of biofuel by blending ethanol with motor spirits. No reference was made to blending butane and motor spirit in the manufacturing licence at any stage.[23] TNZ commenced the process of blending butane with motor spirit in March 2003. The Comptroller's evidence is that the Customs Service was not madeaware that this was happening until a complaint was made in 2010. Thereafter, a prolonged audit process was undertaken by the Comptroller resulting in a final report being issued in March 2012. The report concluded that the process of blending butane and motor spirit amounted to manufacturing under the CE Act and that TNZ had been doing so without a licence for that purpose.[24] The Comptroller issued draft assessments of the duty owed for the period 1 January 2007 to 31 December 2010. A draft assessment of additional duty under s 87 of the CE Act was also made for the period 1 January 2007 to 1 April 2011.Mr Palmer informed us on behalf of the Comptroller that she has not reached a final view in respect of the additional duty and has an open mind on that issue.The scheme of the CE Act[25] The Long Title of the CE Act provides that it is:An Act to –(a) reform the law relating to customs, excise, and other duties; and(b) provide for the administration and enforcement of Customs controls at the border; and(c) repeal the Customs Act 1966; and(d) provide for related matters[26] The CE Act imposes excise duty and excise-equivalent duties on threecategories of goods: tobacco, fuel and alcohol. The term "duty" is widely definedand includes not only excise and excise-equivalent duty, but also duties from taxes or levies imposed under other legislation such as the Goods and Services Tax 1985, the Accident Compensation Act 2001, and the Energy (Fuels, Levies and References) Act 1989.3[27] In broad terms, the duties are imposed upon the importation of excisable goods into New Zealand or upon their manufacture in this country. The CE Act provides for a system of control by the New Zealand Customs Service withinCCA's.4 Imported goods must be formally "entered"5 and once "passed" must bedealt with in accordance with the entry and with the CE Act.6 Imported goods remain subject to the control of Customs from the time of importation until the time they are lawfully removed from a CCA for home consumption or exportation.7Goods manufactured in a CCA remain subject to Customs control from the time of manufacture until the goods are lawfully removed for home consumption from a CCA or exported.83 Definition of duty under Customs and Excise Act 1996, s 2(1).4 Customs and Excise Act, ss 10 and 11.5 Customs and Excise Act, s 39.6 Customs and Excise Act, s 41.7 Customs and Excise Act, s 20(1)(a).8 Customs and Excise Act, s 20(1)(e).[28] Goods are deemed to be "removed for home consumption" when the goodsare physically removed from the CCA unless they are moved to another CCA with the approval of the Chief Executive of Customs, or they are temporarily removed under approval from the Chief Executive, or they are removed for export.9[29] The key part of the CE Act for present purposes is Part 7. With certain exemptions which have no application in the present case, no-one may manufacture goods specified in Part A of the Excise and Excise-equivalent Duties Table except in a manufacturing area licensed under the CE Act.10[30] Critically for present purposes, the term "manufacture" is defined:11Manufacture, in relation to goods specified in the Excise and Excise- equivalent Duties Table, means, —(a) if the goods are tobacco, the process of cutting, pressing, grinding, crushing, or rubbing raw or leaf tobacco, or otherwise preparing raw or leaf tobacco or manufactured or partially manufactured tobacco, and of making cigarettes whether from duty-paid or from non-duty- paid tobacco, and of putting up for use or consumption scraps, waste, chippings, stems, or deposits of tobacco resulting from processing tobacco:(b) if the goods are a fuel, any operation, or process, involved in the production of the goods:(c) if the goods are neither tobacco nor a fuel, —(i) any operation, or process, involved in the production of the goods; and(ii) any ancillary process (as defined in subsection (3)) that takes place on premises that are not licensed, or required to be licensed, under the Sale of Liquor Act 1989[31] Excise duty on manufactured goods is imposed by s 73 which relevantly provides:73 Excise duty on goods manufactured in manufacturing areas(1) In respect of all goods that are manufactured in a manufacturing area and that are specified in Part A of the Excise and Excise-equivalent Duties Table there must be levied, collected, and paid excise duties,9 Customs and Excise Act, s 72 and see also s 20(2).10 Customs and Excise Act, s 68(1).11 Customs and Excise Act, s 2(1).if any, at the appropriate rates set out in Part A of the Excise and Excise-equivalent Duties Table.[32] Subject to certain exceptions which have no application in the present case, the relevant duties are payable even if the manufacturing takes place in an area not licensed as such.12[33] For imported goods, s 75(1) applies:75 Excise-equivalent duty on imported goods(1) Subject to this Act, and in addition to any other duties or levies payable on imported goods, excise-equivalent duty at the appropriate rate specified in part B of the Excise and Excise-equivalent Duties Table must be levied, collected, and paid on all goods specified in Part B of the Excise and Excise-equivalent Duties Table that are imported.[34] Excise duty or excise-equivalent duty constitutes a debt due to the Crown and the CE Act specifies when the debt becomes due and payable. In relation to manufactured goods, s 76(1) provides:76 Excise duty a Crown debt(1) Excise duty is a debt due to the Crown and is recoverable by action at the suit of the chief executive on behalf of the Crown, —(a) in relation to goods specified in Part A of the Excise and Excise-equivalent Duties Table that are manufactured in a manufacturing area, immediately on removal of the goods for home consumption in accordance with section 72:(b) in relation to goods specified in Part A of the Excise and Excise-equivalent Duties Table that are, except as provided in section 74(2), manufactured outside a manufacturing area, immediately on manufacture.[35] In respect of imported goods, s 86 relevantly provides:12 Customs and Excise Act, s 74(1).86 Duty on imported goods a Crown debt(1) the duty on all goods imported constitutes, immediately on importation of the goods, a debt due to the Crown.(2) Such duty is owed by the importer of the goods, and, if more than 1 (whether at or at any time after the time of importation) then jointly and severally by all of them.(3) Subject to this Act, such debt becomes due and payable when —(a) goods have been entered in accordance with section 39 and the entry has been passed for home consumption; or(b) goods have been entered in accordance with section 39 for removal to a manufacturing area; or(c) goods have been wrongfully landed or otherwise wrongfully dealt with without having been entered pursuant to section 39; or(d) an offence has been committed against this Act in respect of the goods.[36] Two points are relevant to the payment of duty on imported goods under s 86. First, the section envisages that goods may be imported for manufacturing purposes. Secondly, the Working Tariff we later discuss provides that no duty is payable on motor spirit imported for the purpose of manufacturing. This effectively enables the importer to defer payment of duty until after the manufacturing process occurs.[37] When manufactured goods specified in Part A of the Excise and Excise-equivalent Duties Table are removed from a CCA, they must be formally entered by the licensee of the CCA from which the goods are removed.13 At that time, the licensee may seek a duty credit under s 85(1):85 Duty credits(1) Where the licensee of a manufacturing area purchases materials or goods for use in manufacture, the licensee may, at the time of making an entry for home consumption as required by section 70, claim, as a credit, excise duty or excise-equivalent duty paid in respect of those materials or goods.13 Customs and Excise Act, s 70(1) and (1A).[38] Thereafter, Part 8 deals with the assessment and recovery of duty including any additional duty.14 Assessments of duty are provided for under s 88 which provides:88 Assessment of duty(1) An entry for goods made under this Act is deemed to be an assessment by the importer or licensee, as the case may be, as to the duty payable in respect of those goods.(2) If the chief executive has reasonable cause to suspect that duty is payable on goods by a person who has not made an entry in respect of the goods, the chief executive may assess the duty at such amount as the chief executive thinks proper.(3) The person liable for the payment of the duty shall be advised of the assessment by notice in writing.(4) A person liable for the payment of the duty who is dissatisfied with a decision of the chief executive under subsection (2) may, within 20 working days after the date on which notice of the decision is given, appeal to a Customs Appeal Authority against that decision.[39] Section 88(2) was invoked in the present case because TNZ did not lodge the excise entries required by s 70 upon the removal of the motor spirit from the CCA at Mt Maunganui. Nor did TNZ keep complete and accurate records as required by s 95 of the CE Act. In particular, TNZ was unable to provide verifiable records of the blended product removed from the TNZ terminal prior to January 2009. Later, records of the purchase of butane from OnGas were provided that enabled an assessment of duty to be made.The Duties Table[40] Sections 73(1) and 75(1) of the CE Act refer respectively to Parts A and B of the Excise and Excise-equivalent Duties Table (which we refer to here as the Duties Table). The Duties Table is defined in s 76A of the CE Act as a document certified by the chief executive under s 76B. It may be modified from time to time. Part A sets out the rates of duty in relation to specified goods manufactured in New Zealand. Part B provides the rates of duty for imported goods. For ease of reference, we have extracted the relevant entries from Parts A and B for regular fuel and butane (classified as a liquefied petroleum gas). We set these out below:14 Customs and Excise Act, s 87.EXCISE AND EXCISE-EQUIVALENT DUTIES TABLEPART AGOODS MANUFACTURED IN NEW ZEALANDExciseItem NoGoods Unit Rates ofduty99.75 Fuels:- Motor spirit with a Research Octane No.(RON) less than 95 (regular grade) which,if imported, would be classified withinTariff item 2710.12.15, 2710.12.19,2710.12.23, or 2710.12.29:99.75.05F - - Blended with ethyl alcohol per l ms 48.524cplus 8cper g of Pb99.75.23D - - Other per l 48.524cplus 8cper g of Pb99.75.69B - Liquefied petroleum gas which, ifimported, would be classified within Tariffitem 2711.12.00, 2711.13.00, or2711.14.01per l 10.40cPART BIMPORTED GOODSExciseItem NoGoods Unit Rates ofdutyFuels:- Motor spirit with a Research Octane No.(RON) less than 95 (regular grade) which,if manufactured in New Zealand, would beclassified within Excise item number99.75.05F, or 99.75.23D:2710.12.15or2710.12.23- - Blended with ethyl alcohol per l ms 48.524cplus 8cper g of Pb2710.12.19or2710.12.29- - Other per l 48.524cplus 8cper g of Pb2711.12.00,2711.13.00or2711.14.01- Liquefied petroleum gas which, ifmanufactured in New Zealand, would beclassified within Excise item number99.75.69BPer l 10.40c[41] There are equivalent provisions for premium grade fuel and other items to which it is unnecessary to refer. For manufactured goods under Part A, the DutiesTable cross-refers to "Tariff items". These are included in Chapter 27 of theWorking Tariff Document of New Zealand which is described as being sourced from two legislative bases, the Tariff Act 1988 and the CE Act. There are two relevant sub-categories of motor spirit identified in Part A of the Duties Table, namely motorspirit blended with ethyl alcohol and "Other". It is accepted that the blend of motor spirit and butane in question falls within the "Other" category. For goods manufactured in that category, the rate provided in the Duties Table at the relevant times is 48.524 cents per litre plus an additional sum per gram of lead. The butane (liquefied petroleum gas) rate is 10.40 cents per litre.[42] Under Part B, the Duties Table cross-refers to the relevant Tariff items formotor spirit. It is evident that in the "Other" category, the cross-references are to motor spirit as defined by the stipulated Tariff items. The applicable duty rates for imported motor spirit in the "Other" category and for butane are the same forimported goods as they are for goods manufactured in New Zealand. But, as earlier noted, if the motor spirit is imported for manufacture in a licensed manufacturing area, no duty is payable at the time of importation. Duty would then become payable after the manufactured goods leave the licensed manufacturing area for homeconsumption. In this case, the motor spirit was not imported "for manufacture" interms of the Working Tariff and duty was paid on importation.[43] The upshot is that if the blending of imported motor spirit and butane amounts to the manufacture of the end product in New Zealand, then it falls within the motor spirit (Other) category and is subject to excise duty at the rate of 48.524 cents per litre (or at such rate as may apply to motor spirit from time to time).Does the blending of butane and motor spirit amount to manufacturing?The judgment in the High Court[44] Mallon J discussed a series of cases where the meaning of manufacturing or producing had been discussed in a sales tax or excise duty context. She concluded that where those expressions had not been defined by statute, the courts had adopted an ordinary meaning of a process in which the resulting goods were different from their constituent parts. However, the Judge recognised that the meaning of thoseexpressions in the present context depended on the particular statutory provision in the light of the purpose of the legislation.[45] The Judge went on to consider the elaborate arguments advanced on behalf of the Comptroller as to the nature of the excise duty and the uses to which the motor spirit is ultimately put. She rejected the proposition advanced by the Comptroller that an examination of the CE Act and related legislation such as the Land Transport Management Act 2003 showed that Parliament intended that excise duty on fuel was, in effect, a proxy for a charge for road use and that Parliament intended to impose excise duty on every litre of motor spirit whether imported or manufactured.[46] The Judge's view was that:[106] The legislative purpose in respect of excise tax on motor spirits isto tax both imported motor spirit and manufactured motor spirit. In each case the motor spirit is to be taxed by volume at the motor spirit rate. The only exception to this is where ethanol is added to the motor spirit. In that case, the ethanol is excluded from the volume to be taxed. That legislativepurpose is met if TNZ's interpretation is correct, even though it means thatless excise tax is collected and correspondingly there is less money to spend on roads.[47] Addressing the legislative history of changes to the definition of manufacture under the CE Act, the Judge placed particular reliance on an amendment in 2002 which introduced an extended definition of "other goods" in the definition of "manufacture" to include "ancillary processes", a term separately defined to includesuch things as filtering, diluting or blending the goods with other goods.15[48] The Judge considered that:[116] ... reading the definition of manufacture in relation to fuel, incomparison with the definition for alcohol, strongly supports TNZ's submission that its operation or process is not an operation "involved in the production of goods". The goods (motor spirit and butane) have already been produced. TNZ blends and dispatches those already produced goods. That is an ancillary process in relation to fuel which, it seems, Parliament didnot intend to be within the definition of "manufacture".[49] The Judge went on to say that Parliament must be taken to have turned itsmind to the appropriate definition for "fuels" and the different definition adopted for15 Customs & Excise Act, s 2(3) as discussed at [84] below.other goods. In concluding that the process adopted by TNZ did not amount to manufacturing, the Judge expressed her overall reasons in the following terms:[120] The greater total volume that results from the operation arises fromblending (i.e. combining/mixing) two products. Blending two goods is notnecessarily what is meant by "production of the goods". That is because the goods in the blend were already in existence (i.e. produced) before they were blended. It is for this reason that the courts have asked whether the goods that result from the process or operation are any different from the goods before the process or operation. That is not determined by whether the blend now has a new name.[121] In the present case there were X units of motor spirit (with some levels of butane already in the motor spirit mixture as imported) and Y units of butane before the operation. Afterwards there was motor spirit and butane with combined units of X and Y. A mixture had been made but it was no different from its constituent parts in any material way. In its ordinary meaning, to blend two products into one combined product (although it can be described as an operation or process) is not necessarily the same as to"manufacture" or "produce" the combined product where the combinedproduct which [sic] is not different to its constituent parts. If Parliament intended this kind of operation or process to be captured then it could have said so more explicitly, as it has done in the case of alcohol.[122] I consider that the best indicator of Parliament's intent comes from the definition of "manufacturing" for motor spirit, as compared with thedefinition of "manufacturing" for alcohol. This intent is consistent with theordinary meaning of the words of the definition. It is also supported to some degree by the scheme of the Act whereby the liability under s 75 arises on the importer in accordance with the importer's "entry" for the goods and thescope for a manufacturer to claim a credit does not directly match the liability that arises under ss 73 and 75. This view is not contrary to an intent to tax importers [and] manufacturers as a proxy for domestic consumption.Case law[50] Mr Harrison relied heavily on a line of cases whose common theme is that manufacturing means a process by which something is made which is different from that out of which it has been made. The authorities are commonly concerned with the interpretation of statutes imposing duty and tax on imported or manufacturedgoods. Mr Palmer's submission is that all the cases relied upon by TNZ aredistinguishable either upon the facts or because they were concerned with differently worded legislation.[51] An early case much cited in later decisions is McNicol v Pinch16 where the Court of Appeal in England was called upon to determine whether saccharin was manufactured or made in England or Ireland. If it was manufactured in England or Ireland, the appellants needed a licence. The appellants obtained duty-paid saccharin of one strength (or level of sweetness) and subjected it to a chemical process which enhanced its strength or sweetness. The majority of the Court held that this did not constitute the manufacture of the goods since no new product was produced. It was saccharin before the treatment and it was saccharin afterwards.[52] Bray J remarked that if the saccharin had been originally manufactured in England or Ireland then, if the interpretation favoured by the respondent Commissioners of Inland Revenue were adopted, the process carried out by the appellants would mean that saccharin would have been manufactured twice and would therefore be subject to duty twice over. He considered this could not havebeen Parliament's intention.[53] Darling J agreed with Bray J but Ridley J dissented. In the latter's view, itdid not matter that the end-product had the same name as it had before. Nor did it matter that the goods might be subject to the payment of duty twice over, noting that this did not in practice occur. Ridley J concluded:17For some commercial purposes which they knew would be beneficial to them the appellants changed the strength of this substance into another strength; and I think they were, in so doing, passing upon it a process of art, which, although it left it in the main the same substance, still was a manufacture of that saccharin.[54] Unlike the present case, there is no suggestion in McNicol that any greater volume of saccharin was produced or that any additional ingredient was used. The majority appeared to have been influenced by the prospect of double duty being imposed, a topic to which we return.[55] A second well-known English case relied upon is the decision of the House of Lords in Cinzano (UK) Ltd v Customs and Excise Commissioners.18 The relevant16 McNicol v Pinch [1906] 2 KB 352 (CA).17 At 363.18 Cinzano (UK) Ltd v Customs and Excise Commissioners [1985] 1 WLR 484 (HL).legislation imposed excise duty on wine imported into the United Kingdom for production in the United Kingdom with rates varying in accordance with the alcohol content. Cinzano proposed to import vermouth into the United Kingdom in separate consignments each with differing alcohol strengths. Duty would be paid on the imported goods which would then be blended. The blended vermouth would have a strength similar to that which Cinzano had hitherto imported in a single consignment but would result in an overall saving of duty. The House of Lords held that the importation and production of wine were mutually exclusive paragraphs in the relevant legislation. The wine had been "produced" prior to importation and was notagain produced during the blending process.[56] This is another case where no additional quantity of the product was produced during blending and no new ingredient added. Unlike the CE Act which allows for the importation of goods for manufacturing purposes, the importation and local production of wine were found to be mutually exclusive concepts in the legislation at issue.[57] Two Australian cases were cited to us.19 The first was Commonwealth of Australia v Genex Corporation Pty Ltd20 in which the High Court of Australia was called upon to consider whether sales tax was payable under Commonwealthlegislation on the sale value of goods manufactured in Australia. "Manufacture" was defined to include "the process or treatment of exposed photograph orcinematographic film to produce a negative, transparency or film strip". Theappellants developed exposed photographic film owned by their customers into negatives which they then used to print photographs for the customers. On the specific wording of the statute, the Court found that the sales tax was payable only in respect of negatives developed for the customers but not used to produce photographic prints.[58] Consideration was given to whether, absent the specific provision relating to the processing of film, the process utilised by the appellants would constitute19 Three other Australian cases were cited in the High Court but none is of material assistance:Irving v Munro & Sons Ltd (1931) 46 CLR 279; Adams v Rau (1931) 46 CLR 572; and Federal Commissioner of Taxation v Rochester (1934) 50 CLR 225.20 The Commonwealth v Genex Corporation Pty Ltd [1992] 176 CLR 277."manufacture" under the legislation. The Court considered that the ordinary meaning of "manufacture" required one to ask whether that which was made was a different thing to that out of which it was made.21 On the facts, the modification effected by the development was more aptly described as treatment, not manufacture.22 This case too is readily distinguishable. It turned on the legislation at issue and the relevant taxing point for sales tax purposes.[59] The second case cited was a decision of a Full Bench of the Federal Court inFederal Commissioner of Taxation v Jax Tyres Ltd.23 The question was whether the re-treading of tyres constituted manufacturing under the Commonwealth sales taxstatute. The term "manufacture" was defined to include "(a) production, and (b) thecombination of parts or ingredients whereby an article or substance is formed which is commercially distinct from those parts or ingredients ...".[60] The Court found that the retreading process was not manufacturing. Relying on McNicol v Pinch and another Australian case,24 the Court found that the ordinary meaning of the term required the production of a different article from the articles, materials or ingredients from which it was made.25 The process was characterised as the repair or remodelling of an old tyre, not the manufacture of a new one.26[61] The Federal Court also considered the meaning of the word "production":27"Production", which is included in the definition of "manufacture"(para 3(1)(a)), is a word of wide import; but it still involves the element of producing something different from the materials from which it was made. It is not possible to formulate precise definitions of such general terms as"manufacture" and "production"; but they do not bear a restricted meaning. Whatever answers the description of "manufacture" or "production" ofgoods according to accepted usage of the English language is within the Act.[62] The Jax Tyres case is the only Australian decision cited in which a view isoffered about the meaning of "production" when that term is used as part of a definition of "manufacture", as it is in the CE Act. The theme of producing21 At 289, citing McNicol v Pinch.22 At 290.23 Federal Commissioner of Taxation v Jax Tyres Ltd [1984] 5 FCR 257 (FCAFC).24 Federal Commissioner of Taxation v Jack Zinader Pty Ltd [1949] 78 CLR 336.25 At 261.26 At 264.27 At 261.something different is again adopted. It is evident, however, that the outcome inJax Tyres was again influenced by concerns about double taxation. The Court observed:28When considering the question whether particular goods are manufactured for the purposes of the Act, it must be remembered that the general policy of sales tax legislation in this country is to levy sales tax once and only once upon the last sale of goods by wholesale (that is, upon the sale to the retailer by the last wholesaler); to avoid double taxation upon goods which have, through the process of retailing, gone into use or consumption in Australia and are in this sense secondhand goods and outside the scope of the legislation. It is the evident purpose of the Act that the retail price of goods shall not be increased by the incorporation in it of more than one amount ofsales tax: [63] We would add that the express language of part (b) of the definition of manufacture in the Jax Tyres case can also be seen as a strong signal of the statutory intention to impose sales tax only upon the manufacture or production of goods that are commercially distinct from their parts or ingredients.[64] Mr Harrison also referred us to two New Zealand cases. The first is the decision of this Court in Wellington City Council v Attorney General29 which wasconcerned with the Council's liability for customs duty under the CustomsRegulations 1968 on a road sweeper the Council imported from Australia. The sweeper was originally made in the United States. In Australia it was dismantled, a number of parts were repaired or replaced, and some modifications made. If thesweeper was "partly manufactured" in Australia, it could be imported intoNew Zealand without payment of duty.[65] The Court held that the sweeper was not partly manufactured in Australia. As a matter of fact and degree, as well as overall impression, the sweeper had been reconditioned but there was no significant change in form, function or commercial description. It could not fairly be described as a new or different machine.[66] All three members of the Court adopted the "new or different" theme evidentin the English and Australian cases already cited, as well as in another English28 At 262.29 Wellington City Council v Attorney-General [1990] 2 NZLR 281 (CA).case.30 But we consider the case must be viewed in its particular regulatory and factual context, both of which differ in material respects for the present case.[67] The final case mentioned to us is the decision of Tompkins J in International Bottling Co Ltd v Collector of Customs.31 At issue was the liability of International Bottling for a large quantity of whisky which went missing after being imported but while still within a designated Licensed Manufacturing Area (LMA) operated with the approval of the then Customs Department. It was unclear whether the whisky had been stolen or whether it may have leaked from a holding tank. The Judge considered that, on the balance of probabilities, it was more likely to have been stolen.[68] Excise duties and other charges were assessed on the whisky on three bases. The first was that the whisky had been manufactured in the LMA so that duty was payable under the Customs Act 1966 as soon as it was removed from that area. The second was whether there was a deemed manufacture on the basis that International Bottling was a contractor who had worked on the whisky (an issue to which we will return). The third basis is not relevant for present purposes.[69] The term "manufacture" was defined in s 2(1) of the 1966 Act:"Manufacture" includes —(b) In relation to any goods specified in Schedule 3 to this Act [whichincludes whisky] any process of production, assembly, packaging, and any other operation or process involved in the production of the goods, —and "to manufacture" and cognate expressions have correspondingmeanings.[70] Tompkins J applied the English and Australian authorities already discussed and held:3230 Coleborn (T) & Sons Ltd v Blond [1951] 1 KB 43 per Denning LJ at [49].31 International Bottling Co Ltd v Collector of Customs [1995] 2 NZLR 579 (HC).32 At 583.I am satisfied that nothing that occurred to this whisky from when it reached the LMA in the likwitainers until it went missing amounted to an operation or process involved in the production of the whisky. The whisky had already been "produced" at the stage when it was manufactured in theUnited Kingdom. All that occurred to it during the relevant time was that it was held in various containers and was tested for quality. On the ordinary use of the English word, none of those processes amounted to "production"of the whisky.[71] The conclusion reached on the facts by Tompkins J is unsurprising in the light of the evidence. No new ingredients were added and the volume of whisky was not increased. Both these facts distinguish the case from the present. Theapplication of the "nothing different" approach may have been apt in suchcircumstances. But, for reasons we discuss below, this approach is not appropriate in the present case.[72] We agree with Mallon J that the authorities cited do not control theinterpretation of the term "manufacture" as defined in the CE Act. It is axiomatic, asthe Judge recognised, that the meaning of the legislation must be ascertained from its text and in the light of its purpose.33 We are satisfied that the cases relied upon by Mr Harrison are all distinguishable.[73] Apart from the obvious point that the cases relied upon by Mr Harrison need to be read in their own context and in the light of the legislation under consideration, a key point of distinction is that none of the cases involved the creation of additional volumes of the goods in question. We regard this as an important point of distinction since the duty imposed on motor spirit under the CE Act is applied on a per litre (volume) basis. It is apparent that the spectre of double duty was a factor in some of the cases. This is not an issue in the present case because of the right to obtain credits for duty already paid, a topic we discuss further below. Another point of distinction is that the cases did not involve the addition of other ingredients.[74] We turn now to consider briefly the history of the imposition of duties on motor spirits in New Zealand.33 Interpretation Act 1999, s 5(1).Historical background[75] Mr Palmer has provided a helpful background to the imposition of excise duty on motor spirits. Such a duty was first imposed by the Motor-spirits Taxation Act 1927. The great majority of the revenue derived from the duty was paid into a fund known as the Main Highways Account. Initially, it was administered as a form of customs duty but, by the Customs Acts Amendment Act 1931, its application was extended to include motor spirit manufactured in New Zealand as well as imported motor spirit. That Act was repealed by the Transport Act 1949 which continued the allocation of tax on motor spirits for transport purposes.[76] In 1961 the previous duty was replaced by a separate duty on motor spirits imposed as a sales tax on wholesale distributors by the Motor Spirits Duty Act 1961. The purpose of using the funds for roading remained. The Customs Amendment Act 1986 imposed excise duty on fuels in a form which remains largely unchanged in theCE Act of today. We accept Mr Palmer's submission that, at least from 1927, someform of excise duty has been imposed on motor spirit manufactured and later imported into New Zealand by volume and for the purpose of paying for transport infrastructure.[77] The link between the collection of excise duty and its expenditure is continued under the Land Transport Management Act 2003 in which revenue derived from all excise duty and excise-equivalent duty on motor spirits, compressed natural gas or liquefied petroleum gas under the CE Act is dedicated for expenditure on land transport activity.34[78] Mr Palmer submitted that excise duty was an hypothecated tax on consumption and could be regarded as, in effect, a proxy for a charge on consumersfor road use. We accept that excise duty is "hypothecated" in the sense that it isspecifically earmarked for land transport purposes. We also accept that excise and excise-equivalent duty on motor spirit is intended to be imposed on motor spirit imported or manufactured for consumption.34 Land Transport Management Act 2003, ss 6, 10 and 40.[79] However, we agree with the Judge and with the submission made by Mr Harrison that the immediate focus must be upon the text and purpose of the CE Act itself. The use to which the revenue derived is ultimately put, does not materially assist in resolving the issue of interpretation which arises in this case.Legislative history of the definition of manufacturing[80] The Judge set out the progressive development of the definition of"manufacturing" under previous legislation. It is sufficient to note that it was notuntil an amendment in 1986 to the Customs Act 1966 that there was any definition ofthe term "manufacture" other than in relation to tobacco.[81] In the 1986 amendment,35 the definition was amended to the form in force at the time of the International Bottling case. The CE Act came into force about 12 months after that decision was delivered. At the time, the CE Act defined"manufacture" in these terms:36"Manufacture", in relation to goods specified in Schedule 3 to this Act,means, —(a) In relation to tobacco (b) In relation to goods other than tobacco, a process of production, assembly, packaging, or other operation or process involved in the production of the goods; —and "to manufacture" and cognate expressions have correspondingmeanings:[82] We agree with the High Court Judge that the most that could be assumed from the juxtaposition of the International Bottling case and the introduction of the CE Act is that the storage and testing of whisky was not viewed as an operational process which ought to render whisky subject to excise tax on the basis that it was manufactured in New Zealand.[83] Of potentially greater significance is the amendment made in 2002 we havealready touched upon. At that time, the definition of "manufacture" was changed to35 By s 2 of the Customs Amendment Act 1986.36 Customs and Excise Act, s 2(1) as enacted.its current form. As the Judge pointed out, this amendment separated fuel from thecategory of "other goods". This had the effect of creating the three categories of tobacco, fuel and other (essentially alcohol). By virtue of this amendment, thedefinition of "manufacturing" for fuel no longer included "assembly" or "packaging". We agree with Mallon J that it is reasonable to infer that the exclusion of assembly or packaging in relation to fuel was considered to be inappropriate to describe a process associated with fuel.[84] However, the Judge considered that the amendment to the third category of goods subject to duty was important. In particular, the addition of clause (c)(ii)introducing the term "ancillary process". That expression is defined in s 2(3) of theCE Act:(3) For the purposes of paragraph (c)(ii) of the definition of manufacture in subsection (1), the term ancillary process, in relation to the manufacture of goods specified in the Excise and Excise-equivalent Duties Table that are neither tobacco nor a fuel, means 1 or more of the following processes:(a) filtering the goods, diluting the goods, or blending the goods with other goods (whether the other goods are the same as, similar to, or different from, the goods):(b) putting the goods for the first time into a container (for example, a bag, barrel, bottle, can, cask, drum, or keg) in which they might be presented, or from which they might be dispensed, for sale to the public or any member of the public:(c) labelling or marking, for the first time, containers filled with the goods.[85] Mallon J referred to the Explanatory Note to the Bill that introduced the amendment37 which said, amongst other things:The new definition of the term manufacture distinguished between all 3 of those classes of goods (tobacco, fuels, and alcoholic beverages) in order to extend the element relating to alcoholic beverages so that it includesancillary processes (as defined by new subsection (3), proposed to be added by clause 3(4).[86] We agree with Mr Palmer that it is not appropriate to read a great deal into the differences, post the 2002 amendment, between paragraph (b) and (c). On one37 Customs and Excise Amendment Bill (No 4) 2001 (184-1), (Explanatory Note) at 2.view, it might be said that if Parliament had intended a blending of motor spirit with other goods to amount to manufacture, then it would have made this clear at the time of the 2002 amendment by stating that this was intended in relation to fuel as it was for other goods subject to duty.[87] However, it is clear from the Explanatory Note that Parliament's attentionwas mainly focused on clause (c) of the definition and we do not think it safe toassume that Parliament's mind was directed to clause (b) at the same time. Our research has not revealed any Parliamentary materials to suggest this.The text of the definition[88] For convenience we repeat the relevant part of the definition of"manufacture" in s 2 of the CE Act. The term "manufacture" and "cognate"expressions means:(b) if the goods are a fuel, any operation, or process, involved in the production of the goods:[89] It is not in dispute that the process of blending butane with motor spirit is an"operation or process" in terms of the statutory definition. The key point ofdifference is whether that operation or process is "involved in the production of the goods". Mr Harrison argued that "production" was synonymous with "manufacture". The essence of his argument in support of the conclusion of the Judge is that:No new product is derived from the process. The goods are motor spirit before the process and remain motor spirit afterwards.That is so both for tariff purposes under the CE Act and the Duties Table as well as for the purposes of the Engine Fuel Specifications Regulations 2011.38The motor spirit derived from the blending process is not marketed any differently from the motor spirit which existed prior to blending.38 See definition of "petrol" in the Engine Fuel Specifications Regulations 2011, s 5(1).[90] We consider that Parliament must have intended the term "production" in the statutory definition to mean something different from the term "manufacture".Otherwise, the definition would be tautologous. In context, we consider the term"production" is intended to be a word of wide import. It has the connotation of the making or bringing into being of goods by some operation or process. Taking into account the purpose of the CE Act which we shortly discuss, we consider the term"production" is sufficiently wide to include the adding or mixing of ingredientswhere that process has the effect of increasing the overall volume of the resulting goods beyond a level properly regarded as de minimis.The purpose of the CE Act[91] Our view as to the meaning of the term "manufacture" is supported by thescheme and purpose of the CE Act. The key features to emerge from our analysis are, first, that the importation and local manufacture of goods are not treated as mutually exclusive concepts. Indeed, the importation of goods for the purpose of manufacture is specifically allowed for as part of the duty regime. Amongst other things, this has a cash flow advantage to importers by enabling the payment of duty to be deferred until after manufacturing is complete and the goods have left the licensed manufacturing area for home consumption.[92] The second key feature of the CE Act is that excise duty is imposed on fuel (whether imported or locally manufactured) on the basis of volume. That has been the case since excise duty was first imposed on motor spirits. It may be differentiated from excise duty imposed on an ad valorem basis.[93] Thirdly, excise duty at the motor spirit rate is payable on the total volume of motor spirit without differentiation according to its constituent elements. The only exception to that is in relation to ethanol where, apparently to encourage the production and use of biofuels, Parliament has determined that no duty is payable on the ethanol content of the relevant volume of motor spirit.[94] Fourthly, Mr Harrison accepted that if the butane had been added to the motor spirit prior to importation, duty would have been payable at the motor spiritrate on the full volume of motor spirit imported. It would be odd if duty could be avoided or reduced by adding more butane after importation.[95] Mr Harrison submitted that the prospect of double taxation does arise under the CE Act. Although acknowledging the existence of s 85 of the CE Act under which credits may be obtained in respect of duty, Mr Harrison submitted that TNZ could not, in the circumstances, claim such credits since it had not been the importer of the goods since 1 July 2007.[96] It was submitted that, for the purposes of s 85, TNZ was not the purchaser of the materials or goods used in the process undertaken by TNZ at its Mt Maunganui facility. It followed that if TNZ was required to pay duty on the motor spirit resulting from its process at the facility, then it could not claim a credit for the butane and motor spirits utilised in the process. We are not persuaded there is any substance in this point. In practice, the relevant parties would simply make the appropriate contractual arrangements to ensure the credits were obtained either directly or indirectly by way of indemnities or including the duties in the pricing arrangements between the parties.[97] In short, the purpose of the CE Act is to levy and collect excise duty, calculated by volume, on all motor spirit imported or manufactured locally. The availability of credits under s 85 or by appropriate commercial arrangements between the affected parties removes any element of double taxation.Conclusion on the manufacturing issue[98] We are satisfied that, properly interpreted, the process undertaken by TNZ of adding butane and/or ethanol to motor spirit amounts to manufacturing for the purposes of the CE Act. The text of the legislation considered in the light of its purpose shows that Parliament intended excise duty to be paid on the full volume of motor spirit imported into New Zealand or locally manufactured.[99] It may be that minor additives (such as colouring or dyes) that do not increase the volume by anything other than a de minimis quantity would not amount to manufacturing for excise duty purposes. However, the effect of adding the butane inthis case was to increase the volume of motor spirit by an average of five per cent. Over time, this resulted in the production of very large quantities of additional motor spirit and a loss of revenue to the government of some millions of dollars.[100] Like Ridley J in the McNicol case, we do not think it matters that for tariffand fuel specification purposes, the product resulting from TNZ's process was stillcategorised as motor spirit as it was before. The key difference is the additional volume of motor spirit produced.[101] While we do not consider it necessary that the process would result in"something different" being produced, the undisputed evidence of Dr Koutsaenko isthat this indeed occurred.39 Of importance too, is that the added butane becomes part of the petrol and loses its separate identity, other than for analytical purposes. Of course, where both ethanol and butane are added in a particular motor spirit blend, the case for the Comptroller is even stronger.[102] Mr Palmer sought to make something of the point that TNZ had applied for and obtained a manufacturing licence to add ethanol to motor spirit at its facility but did not do so for blending butane with motor spirit. Various explanations were given by TNZ for this apparent inconsistency but we do not consider that the steps taken or not taken by TNZ can bear upon the interpretation point. That depends on the proper construction of the legislation. If the relevant process amounted to manufacture, then a licence was required for the addition of both ethanol and butane. However, as we later discuss, this apparent inconsistency has a bearing on TNZ's legitimateexpectation argument.The Comptroller's deemed manufacturing argument[103] Mr Palmer advanced an alternative argument based on s 69 of the CE Act.40As it stood at the relevant time, s 69 provided:39 See the evidence discussed at [19] and [20] above.40 This section was substantially amended from 6 April 2012 by s 10 of the Customs and ExciseAmendment Act 2012. But it is common ground that these amendments have no relevance tothe present case. The operations conducted by TNZ that are relevant for present purposes alloccurred prior to that time.69 Goods deemed to have been manufactured(1) For the purposes of this Act, —(a) compressed natural gas is deemed to have been manufactured by a licensee of a manufacturing area when natural gas supplied by the licensee to a compressed natural gas fuelling facility is compressed for use as a motor vehicle fuel:(b) goods on which work has been done by a contractor shall be deemed to have been manufactured by the contractor:[104] Mr Palmer submitted, with little enthusiasm, that if the Comptroller's primaryargument were not accepted, TNZ was deemed to have manufactured the motor spirit by virtue of s 69(1)(b) because it was a contractor that had worked on the goods. It did not matter that, since 1 July 2007, TNZ was not the owner of the goods. Mr Palmer made it clear that this alternative argument was not the Comptroller'spreferred outcome.[105] Given our conclusion in favour of the Comptroller's principal argument, it isnot strictly necessary for us to determine this point. It was not raised in the High Court so we do not have the benefit of Mallon J's view on the issue. However,had it been necessary to determine this issue we would have had no difficulty inaccepting Mr Harrison's simple submission that s 69 is not intended to operate as anexpansion of the definition of manufacture in s 2. Rather, it is intended to clarify specific issues in order to aid the operation of the excise duty regime.[106] Section 69(1)(a) defines the point of time when compressed natural gas is deemed to have been manufactured. Paragraph (b) relates to the identification of the person or entity who is to be treated as the manufacturer for the purposes of the CE Act even if the goods used in the manufacturing process are owned wholly or in part by others.41 Prior to the insertion of ss 68A, 68B and 68C in 2008, 2009 and 2012 respectively, s 69 immediately followed s 68, which prohibits the manufacture of goods as specified in Part A of the Duties Table except in the licensed manufacturing area. Section 69(1)(b) clarifies that a contractor who has worked on the goods is deemed to be a manufacturer for the purposes of s 68.41 See the definition of "contractor" in s 2.[107] Section 69(1)(b) also has implications as to the persons or entities liable for excise duty since, in terms of s 76(2)(a), excise duty on manufactured goods is owed by the occupier of the place where the goods have been or are manufactured in addition to every person who is or becomes the owner of the goods before the excise duty has been fully paid.42 To the extent that Tompkins J reached a different view about s 69(1)(b) in the International Bottling case,43 we disagree with that view.TNZ's argument based on legitimate expectationFactual background[108] As noted earlier, TNZ and Gull began adding butane to motor spirit commercially in 2003. Prior to that time, investigations were carried out into the economics and feasibility of doing so. TNZ made inquiries of Customs Service officers at Tauranga in 2002. TNZ pleaded that, in consequence of assurances given in that year, it was understood that excise duty at the motor spirit rate would not be imposed on product resulting from the mixing processes intended.[109] TNZ sought a declaration that the Comptroller was bound to give effect to the assurances given in 2002 and that TNZ had a legitimate expectation that the assurances given would continue to apply until withdrawn by the Comptroller, and then only so as to operate with prospective effect. A further declaration was sought that TNZ was not liable to pay either excise duty in respect of the motor spirit resulting from the mixing process.[110] TNZ's terminal manager, Mr Alan Mountfort, gave evidence aboutdiscussions and correspondence he had with Mr Selwyn Wakefield in 2001 and 2002. Mr Mountfort produced a letter dated 4 April 2002 that he had written to Mr Wakefield after a discussion with him about the excise duty implications of the intended process. We set out the letter in full:42 Section 76(2)(b).43 International Bottling, above n 31, at 584.4 April 2002NZ Customs Service, TaurangaAttn: Mr Selwyn WakefieldDear SirRe: "In-to-truck" Fuel MixingI write to confirm the details of our telephone conversation today and to ask for written confirmation from your office to insure I have made the correct interpretation based on our conversations.Terminals NZ Ltd intends to mix fuel components from storage tanks within [its] compound into a fuel truck or drums at the point of loading. Each of the components will be Duty/Excise paid at the applicable rate for each component into our store prior to loading either on import or at time of purchase from the local NZ suppliers. The mix will then be sold to our customers at the time of request for the mix. It is not our intention to be blending in our bulk tanks at this stage.Typical components for the mix are but not limited to:Gull Regular or Premium Motor Spirit (80-90%)Denatured Ethanol (5-10%)Un-odourised Butane (5-10%)A variety of combinations of components including but not limited to the above may be used in any combination from time to time depending on customer requirements. Quantities are expected to be substantial but indeterminate at this time for any one combination.Based on our conversation today we determine that:1. Each of the individual components has had Duty/Excise paid at the applicable rate at the respective point in the importation/supply/manufacture chain;2. The mixing of any combination of these components into the truck/drum prior to sale is NOT SUBJECT TO further Duty/Excise.Thank you for your rapid response to our questions. I look forward to your confirmation and reply.Should you have any further queries please feel free to contact me at the Mount Maunganui office.Yours faithfullyTerminals NZ LtdAlan Mountfort(Terminal Manager)[111] In response, Mr Wakefield wrote to Mr Mountfort on 9 April 2002:9 April 2002The Terminal ManagerTerminals New Zealand LtdDear Mr MountfortI am writing in reply to your letter dated 4 April concerning your Company'sproposal to mix fuel components from storage tanks to fuel trucks for the purpose of supplying special needs customers.I understand that all the individual components to be used will have had Duty/Excise paid on them prior to mixing.I can confirm that the mixing of any combination of these components into the truck/drum prior to sale will not be subject to further Duty/Excise liability.Yours sincerelySelwyn WakefieldClient Service Officer (Excise)For Operations Manager, Tauranga[112] Mr Wakefield's letter refers to supplying "special needs customers".Mr Mountfort's evidence was that he telephoned Mr Wakefield to clarify what was meant by the reference to "special needs customers". That was because one element of Gull's strategy was to reach customers who had engines needing high octaneproduct. He thought Mr Wakefield might have been referring to these customers as special needs clients.[113] Mr Mountfort did not give any specific evidence about the content of the conversation, no doubt because it occurred at least eight years before it became anissue. However, Mr Mountfort made a handwritten note on Mr Wakefield's letter of9 April 2002 to the following effect:Confirmed phone conversation 22/5/02 1:45pm applies to gross petrol station volumes as well.[114] Mr Wakefield's evidence was that, in 2002, he was part of a small revenueand audit team at the Tauranga office of the Customs Service. There were two client services officers who reported to the chief customs officer who, in turn, reported tothe port manager. Mr Wakefield said he had regular telephone contact with Mr Alan Smith who worked in the Customs policy division in Wellington and was considered to be an expert in relation to excise matters. Not surprisingly, Mr Wakefield was unable to recall the content of telephone discussions between himself and Mr Mountfort. However, he recalled speaking to Mr Smith before responding to Mr Mountfort's letter of 4 April 2002.[115] There was, he said, much discussion at the time about biofuels. At the time, the government was encouraging companies to use biofuels to reduce theconsumption of imported petrol. He viewed Mr Mountfort's letter of 4 April 2002 asrelating to experimental biofuels trialling. His reference to special needs customers were people involved with racing cars, tractors or other farming machinery or taxis.[116] When informed (after the dispute arose) about Mr Mountfort's file note of theconversation of 22 May 2002, Mr Wakefield expressed concern. He had notpreviously seen the file note since it had been kept on TNZ's files and had not beendisclosed to Customs. He said he would have questioned any advice by TNZ that their biofuels trial was being extended to the distribution of gross petrol sale volumes. Such a far-reaching decision would have "rung major alarm bells". He would not have made a decision of that kind "on the spot" but would have checkedwith Wellington first.[117] Mr Wakefield's evidence was supported by Mr Smith who gave evidence that he recalled several telephone conversations with Mr Wakefield around the time in question including one relating to the implications of Gull and TNZ trialling biofuels in one of their company vehicles, using excise-paid fuel components. Mr Smith recalled his advice to Mr Wakefield was that he did not see any issue given the minor nature of the trials. He could not recall any subsequent inquiry to the effect that Gull and TNZ wished to apply the same fuel-blending process to their gross petrol sales. This would have raised very different issues in his mind.[118] We accept Mr Harrison's point that limited weight can be given to thisevidence given long after the events in question. The primary focus must be on the documentary evidence at the time. We also record that TNZ's evidence was thatCustoms officials had visited its facility on several occasions and TNZ maintains thatit ought to have been apparent to the officials that butane was being mixed with motor spirit, yet no concerns were raised about the need for an additional manufacturing licence or the payment of further excise duty on the blended product.The Judge's findings[119] As earlier noted, it was not necessary for Mallon J to reach a conclusion on the legitimate expectation and estoppel arguments raised by TNZ because she had found in favour of TNZ on the manufacturing issue. However, the Judge briefly considered the legitimate expectation argument. She concluded:[134] In my view the assurance relied on in this case was not of a kind that TNZ could legitimately expect the Comptroller to adhere to. It was not reasonable for TNZ to rely on a handwritten note of a telephone conversation as recording a considered determination, ruling, or decision by the Comptroller that excise duty was not payable at the motor spirit rate on the butane. This is particularly so when Parliament has set out in the CE Act the circumstances in which the Comptroller can be bound through the issue of binding rulings. TNZ submits that it could not seek a ruling because s 119 requires that the application for a ruling be made in respect of particulargoods. I do not see that as preventing an application in respect of Gull'smotor spirit and butane goods. In any event there is no evidence that TNZ considered whether an application could be made. In my view the informal indication received from Mr Wakefield was not an assurance of a kind that fairness now requires the Comptroller to be bound by it, in the exercise of her powers under s 88.[120] In relation to the argument based on promissory estoppel, the Judge noted that this cause of action was not pressed by TNZ and that no detailed submissions were made. She observed, however, that estoppel relating to the exercise of a statutory power could not provide a remedy in circumstances where a legitimate expectation was not made out.Legitimate expectation – principles[121] The concept of legitimate expectation may be viewed as an aspect of the administrative law principle that requires governments and public authorities to act fairly and reasonably. The general principle was formulated by the Privy Council inAttorney-General of Hong Kong v Ng Yuen Shiu:4444 Attorney-General of Hong Kong v Ng Yuen Shiu [1983] 2 All ER 346 (PC) at 351.when a public authority has promised to follow a certain procedure, it is inthe interests of good administration that it should act fairly and should implement its promise, so long as it does not interfere with its statutory duty.[122] This general principle was affirmed by the Privy Council more recently inNew Zealand Maori Council v Attorney-General45 but with the qualification that a successful challenge to an assurance of this type would depend in part on whetherthere was any "satisfactory reason" for the Crown not to comply with it.[123] Establishing a legitimate expectation in administrative law is not dependent on the existence of a legal right to the benefit or relief sought. The expectation might be engendered by promises that a particular authority will act in a certain way or by the adoption of a settled practice or policy which the claimant can reasonably expect to continue.46 A promise of the kind alleged may be express or implied.47[124] Legitimate expectation is to be distinguished from a mere hope that a cause of action will be pursued or a particular outcome gained.48 To amount to a legitimate expectation, it must, in the circumstances (including the nature of the decision- making power and of the affected interest) be reasonable for the affected person to rely on the expectation.49[125] Where legitimate expectation is raised, the inquiry generally has three steps. The first is to establish the nature of the commitment made by the public authority whether by a promise or settled practice or policy. This is a question of fact to be determined by reference to all the surrounding circumstances. A promise or practice that is ambiguous in nature is unlikely to be treated as giving rise to a legitimate expectation in administrative law terms.45 NZ Maori Council v Attorney-General [1994] 1 NZLR 513 (PC) at 525.46 Council for Civil Service Unions v Minister for the Civil Service [1985] AC 374 (HL) at 401 per Lord Fraser.47 Vea v Minister of Immigration [2002] NZAR 171 (HC).48 Haoucher v Minister for Immigration & Ethnic Affairs [1990] 169 CLR 648 at 682; and White v New Zealand Stock Exchange [2000] NZAR 297 (HC) at 314.49 R v Secretary of State for Education and Employment, ex parte Begbie [2000] 1 WLR 1115 (CA).[126] The second is to determine whether the plaintiff's reliance on the promise orpractice in question is legitimate. This involves an inquiry as to whether any such reliance was reasonable in the context in which it was given.[127] The third, and often most difficult part of the inquiry, is to decide what remedy, if any, should be provided if a legitimate expectation is established.[128] Addressing the first issue, it is clear from the correspondence and the course of events that there was, at least until the telephone conversation on 22 May 2002, amisunderstanding between Mr Mountfort and Mr Wakefield. Mr Mountfort's letterof 4 April 2002 did not refer to special needs customers and TNZ says it envisagedbulk supply. Certainly, there is reference in Mr Mountfort's letter to an expectation that quantities would be "substantial but indeterminate at this time". But thereference in Mr Mountfort's letter to "customer requirements" provided some foundation for Mr Wakefield's reference in his reply on 9 April 2002 to special needscustomers.[129] The fact that there was a lack of clarity is confirmed by Mr Mountfort'sevidence that it was necessary for him to telephone Mr Wakefield to seekclarification. This did not occur until approximately six weeks after Mr Wakefield's reply of 9 April 2002. Assuming the accuracy of Mr Mountfort's file note of theconversation, it may be arguable that the combination of the correspondence and the telephone conversation amounted to advice on the part of the Customs Service thatexcise duty would not be levied upon the motor spirit arising from TNZ's processesas outlined in its letter of 4 April, whether for special needs customers or for bulk supply. It is important to note, however, that neither Mr Mountfort nor Mr Wakefield refer in the correspondence or in the telephone record to the question of whether theprocess involved amounted to "manufacturing" under the CE Act.[130] However, we see the second stage of the inquiry as determinative. We agree with the Judge that it was not reasonable in the circumstances for TNZ to rely on the correspondence and the verbal clarification. TNZ and Gull were contemplating a reasonably substantial investment in the Mt Maunganui facility in order to provide underground storage for the butane. The advice given by Mr Wakefield wasopen-ended as to time with the result that the savings in duty over a period of years have amounted to some millions of dollars. No doubt that is why TNZ sought awritten assurance from the Customs Service in the first place. TNZ's evidenceconfirmed that the absence of any further duty was an important factor in the economic viability of the project. Then, when faced with an apparent ambiguity in the response from the Customs Service, TNZ sought only a verbal clarification and did not ask for the verbal statement to be confirmed in writing. Nor did TNZ itself confirm their understanding of the conversation in writing and seek written confirmation. Given the scale of the proposed investment and the fiscal consequences in respect of excise duty, one would have expected this key difference to have been clarified in writing if it was going to be relied upon.[131] The approach to legitimate expectation in tax cases was described by Bingham LJ in R v Inland Revenue Commissioners, ex parte MFK Underwriting Agents Ltd:50Every ordinarily sophisticated taxpayer knows that the revenue is a tax- collecting agency not a tax-imposing authority. The taxpayers' onlylegitimate expectation is, prima facie, that he will be taxed according tostatute, not concession or a wrong view of the law [132] This general approach to the concept of legitimate expectation is equally applicable to the levying of excise duty. Except where the CE Act confers a specific discretion upon the Comptroller, an importer or manufacturer can ordinarily expectthat excise duty will be payable according to law. The reasonableness of TNZ'sreliance on a telephone discussion by an official must be viewed in that context.[133] We consider too there is some merit in Mr Palmer's point that despite TNZ'smanufacturing licences for the denaturing of ethanol and blending of that substance with motor spirit, it never occurred to TNZ that it required a licence for the blending of butane and motor spirit. At least in hindsight, the inconsistency seems obvious.We do not accept TNZ's argument that a licence was required for the blending ofethanol with motor spirit because such blending fell within the "ancillary process"definition. The relevant goods for the purpose of the definition are the blended50 R v Inland Revenue Commissioners, ex parte MFK Underwriting Agents Ltd [1990] 1 All ER 91 (QB) at 1569.product, namely the motor spirit. This is a fuel and is therefore not covered byparagraph (c) of the definition of "manufacture" or by the extended "ancillary process" definition.[134] We agree with the Judge that the proper course for TNZ to have followed was to obtain a binding ruling under s 119 of the CE Act. Mr Harrison submitted that if the position had been unclear, or if the Comptroller had responded negatively to the letter of 4 April 2002, then the matter could have been clarified by a court ruling or by seeking a binding ruling under s 119.[135] In response, Mr Palmer submitted that the availability of the binding ruling procedure tells against the reasonableness of relying on informal statements by Customs officials. Mr Palmer drew our attention to the specific consequences of a binding ruling set out in s 127. Where a formal ruling has been given that is relied upon, the Comptroller is precluded from recovering the duty otherwise payable in respect of the subject matter of the ruling. And as this Court said in Westpac Banking Corporation v Commissioner of Inland Revenue:51To the more limited extent to which the pleading [of legitimate expectation] relied on other actions by the Commissioner (including views expressed by the Policy Advice Division on legislative amendments and an exposure draft on the application of s BG 2) the argument is inconsistent with the existence of the binding rulings regime and the general principle which we regard as still applicable in the present context, that the Commissioner cannot estop himself from enforcing the law.[136] Mr Harrison first submitted that s 119 was not available to TNZ because anyapplication under that section had to be made in respect of "particular goods specified in the application".52 This meant that a prospective ruling was not available. While accepting that a ruling was arguably available under s 119(1)(b) –"the excise classification of those goods under the Excise and Excise-equivalentDuties Table" – Mr Harrison next submitted that TNZ was not in fact seeking an excise classification of the relevant goods (butane and motor spirit upon which excise duty had already been levied and paid). Rather, it was seeking an assurance51 Westpac Banking Corporation v Commissioner of Inland Revenue [2009] NZCA 24, [2009] 2 NZLR 99 at [85].52 Section 119(1).that those goods would not be so classified as a consequence of the proposed activities.[137] We do not accept these arguments. Plainly the issue was the appropriate excise duty classification on the product resulting from the blending process including the increased volume produced. The fact that this depended on whether the process amounted to manufacturing did not preclude TNZ from seeking a formal ruling under this section. Resolving the manufacturing issue was a necessary step inmaking the ruling. We do not view the reference to "particular goods" as precludinga prospective ruling. That would rob the section of much of its utility and there is nothing in the section to warrant that outcome.[138] Since the legitimate expectation argument cannot prevent the Comptroller from carrying out her obligations under the CE Act, it is important to analyse the nature of her functions under the Act. Mr Harrison submitted that while the obligation to levy, collect and pay excise and excise-equivalent duties under ss 73 and 75 was mandatory, there was no absolute obligation on the part of the Comptroller to levy and collect excise duty. He further submitted that the courts have power to intervene on judicial review where the collection of excise duty would, in the circumstances, amount to an abuse of power.[139] In support, Mr Harrison relied on the well-known decision of the House of Lords in In Re Preston.53 This was a case involving the collection of taxation by theInland Revenue Commissioners. In New Zealand, the Supreme Court's recentdecision in Tannadyce Investments Ltd v Commissioner of Inland Revenue54 has all but eliminated the scope for judicial review in the taxation context. The Supreme Court held that the appropriate procedure is the objection and appeal process under the Tax Administration Act 1994.53 In Re Preston [1985] 1 AC 835 (HL). See, in particular, Lord Scarman at 851–852 and Lord Templeman at 862–864.54 Tannadyce Investments Ltd v Commissioner of Inland Revenue [2011] NZSC 158, [2012] 2 NZLR 153.[140] However, Mr Harrison also referred us to Attorney-General v Steelfort Engineering Co Limited55 in which this Court was considering an appeal under the Customs Act 1966. The respondent company was engaged in the business of importing air conditioners. It applied to the Customs Service for the concession available for dehumidifiers. The Customs Service determined that the concession available for air conditioners applied and refunded the amount of duty paid by the importer up to that point. Three years later, the Customs Service withdrew the concession and claimed duty for the 12 month period preceding the withdrawal. The respondent applied for a judicial review of the decision by the Collector of Customs that the concession had been incorrectly claimed and that the outstanding duty should be paid. Both the High Court and this Court found that the air conditioning units imported by the respondent correctly fell within the concession. That was sufficient to dispose of the case in favour of the respondent but this Court went on toconsider the nature of the Collector's duties under the legislation then in force.[141] The focus of the inquiry in Steelfort was on the Collector's powers to makealterations or additions to an assessment of duty under s 152B of the 1966 Act.56This Court found that this provision was not mandatory since the legislationprovided that the Collector "may" make alterations or additions to the assessment.[142] The Court found there was nothing in the 1966 Customs Act that imposed an absolute obligation on the Collector to assess and collect duty regardless of the circumstances. A sensible compromise was not precluded, particularly if, for example, there was a genuine dispute about the obligation to pay duty in the circumstances. The Court went on to say:57 There is no general power to dispense with the collection of duty. Wherethe Collector is satisfied that duty is properly payable there is an obligation to collect that duty unless to do so would amount to an abuse of power in particular circumstances. But a question of liability for duty may sometimes be genuinely a matter of dispute, which the Collector may recognise even though continuing to hold a particular view; or the Department may be facing an offsetting claim such as that which succeeded in the Martin Square Motors case.58 In circumstances of that kind it may be appropriate for the55 Attorney-General v Steelfort Engineering Co Ltd (1999) 1 NZCC ¶55-005 (CA).56 Now s 89(1) of the CE Act.57 At 61,037–61,038 (Emphasis added).58 Comptroller of Customs v Martin Square Motors Ltd [1993] 3 NZLR 289 (CA).Collector to decide to enter into a compromise or settlement, forgoing all or part of the claimed duty. Ordinarily, the Department will not be free thereafter to depart from the arrangement it has made with the importer. To attempt to do so could be seen as an abuse of power or as an endeavour to exercise a power which, by virtue of the compromise, no longer exists in the particular situation. It is more doubtful, however, whether it is an abuse for the Collector to change his mind about an informal ruling – one which has not been given pursuant to a systematic process or as a means of resolving a dispute over interpretation or Departmental, liability. (our emphasis)[143] This last point provides support for the Comptroller's point about therelevance of the ruling procedure, but Mr Harrison argued that the observations inSteelfort supported TNZ's position that the CE Act does not impose absoluteobligations on the Comptroller to levy and collect duty regardless of the circumstances. Mr Palmer accepted that proposition but submitted that the circumstances of the present case did not mean the Comptroller should be prevented from collecting the relevant duty.[144] The CE Act has a number of specific provisions that plainly confer a discretion upon the Comptroller in relation to the collection of excise duty. These include the power to amend a valuation assessment under s 61, the power to remit or refund additional duty under s 87(2), the power to amend an assessment under s 89(1), the power to release goods subject to duty under s 102(3), the power under s 109 to admit goods free of duty in the case of the reimportation of exported goods and the general power to refund or remit duty under s 113.[145] Aside from those sections (and s 88 to which we shortly turn) we are satisfied that the Comptroller has a general duty to levy and collect excise duty and excise- equivalent duty upon the importation or local manufacture of goods in terms of ss 73 and 75 of the CE Act. That does not preclude sensible compromise where appropriate but we endorse the observations of this Court in Steelfort that the Comptroller does not have a general power to dispense with the imposition or collection of duty except under the specific provisions identified in the CE Act.[146] Mr Palmer did not dispute the proposition that the Comptroller may be subject to judicial review where to attempt to levy or recover duty in the particular circumstances amounts to an abuse of power in the sense described by the House of Lords in In Re Preston or where the Comptroller acts ultra vires. But as the Houseof Lords made clear, the circumstances in which the Court may interfere in such cases are likely to be rare.59 This is particularly so because the CE Act contains its own dispute resolution processes.[147] Mr Harrison pointed out that, in this case, the Comptroller had made her provisional assessment of duty under s 88 of the CE Act:88 Assessment of duty(1) An entry for goods made under this Act is deemed to be an assessment by the importer or licensee, as the case may be, as to the duty payable in respect of those goods.(2) If the chief executive has reasonable cause to suspect that duty is payable on goods by a person who has not made an entry in respect of the goods, the chief executive may assess the duty at such amount as the chief executive thinks proper.(3) The person liable for the payment of the duty shall be advised of the assessment by notice in writing.(4) A person liable for the payment of the duty who is dissatisfied with a decision of the chief executive under subsection (2) may, within 20 working days after the date on which notice of the decision is given, appeal to a Customs Appeal Authority against that decision.[148] An assessment of duty was made under s 88(2) because TNZ did not enter the goods leaving its CCA as required by s 70. If the goods had been formally enteredas required, the volume of product leaving TNZ's facility would have beenaccurately stated. As Mr Harrison pointed out, the chief executive acting under s 88(2) must first be satisfied that there is reasonable cause to suspect that duty ispayable on the goods. If so satisfied, the chief executive "may" assess the duty atsuch amount as the chief executive thinks "proper".60[149] Mr Harrison submitted first that, in administrative law terms, the Comptroller could not lawfully conclude there was reasonable cause to suspect that duty was payable on goods if, to do so, would breach an enforceable legitimate expectation orinvolve an abuse of power. And, he pointed to the use of the term "may" in s 88(2)59 Per Lord Templeman at 863 endorsing the view expressed by Lord Wilberforce in R v Inland Revenue Commissioners ex parte National Federation of Self-employed and Small Businesses Ltd [1982] AC 617 (HL) at 632.60 The chief executive of the Customs Service is known as the Comptroller of Customs: Customs and Excise Act 1996, s 5(2).as implying a discretion rather than a mandatory obligation on the part of the chief executive.[150] We accept that a decision assessing duty under this provision is amenable to judicial review on the grounds discussed by this Court in Steelfort. The CE Act does not have a privative clause equivalent to s 109 of the Tax Administration Act which was considered to be a decisive factor in Tannadyce. However, we do not consider that the chief executive may, under this provision, exercise a general power to dispense with the payment of duty. Rather, the purpose of the provision is to enable the chief executive to make an assessment of duty in circumstances where the entry required for the goods has not been made. In such circumstances there may be an absence of reliable records from which an assessment can be made in which case the chief executive will need to estimate the volume of goods manufactured.[151] We consider the discretion conferred upon the chief executive under s 88(2) is directed towards the assessment of the amount of the duty which may not be assessable with absolute accuracy in such circumstances. The assessment is to be in such amount as the chief executive thinks "proper". We take this to mean that theassessment is to be made on the basis of the rates of duty ordinarily payable under the CE Act on the relevant goods. The chief executive is not entitled under this provision to assess the goods at a rate or on a basis that does not accord with the Duties Table and Working Tariff.[152] We conclude that any discretion available to the chief executive under s 88(2) is narrowly confined and that an assessment made under this provision is much closer to a mandatory obligation in the circumstances in which it applies rather than to a discretionary power. Were it otherwise, an importer or manufacturer who fails to meet the obligation to make the relevant entries in respect of the goods would be placed in a more favourable position than an importer or manufacturer who has complied with the obligations imposed by the Act.Conclusions on the legitimate expectation argument[153] We conclude that it was not reasonable in all the circumstances for TNZ torely on the "assurances" said to have been given in 2002 and that, in any event, theComptroller could not in the circumstances be prevented from carrying out her obligations under s 88(2).[154] Even if, contrary to our conclusions, TNZ had a legitimate expectation that the relevant duty would not be imposed, the relief sought is of a substantive rather than procedural nature. Effectively, TNZ seeks a declaration that it does not have to pay the relevant duty during the period assessed.[155] Where a legitimate expectation is established, the Court may require the decision maker to follow a process that he or she has expressly or impliedly undertaken to follow. Examples include an obligation to give notice to an affected party or to consult before making a decision. In other cases, the court may direct the decision maker to reconsider the decision in the light of the expectation. However, relief in the form of a substantive outcome is rarely, if ever, granted.61 To do so would be to usurp the function of the person or body carrying out the relevant public function.Promissory estoppel[156] We did not hear full argument as to the availability of the remedy of estoppel in public law cases. Given the doctrine of legitimate expectation, it may be seriously doubted whether there is any room for the private law doctrine of estoppel in a public law setting.62 It is unnecessary for us to discuss this issue in any detail since we are satisfied that the remedy of estoppel could not be available on the facts of this case.[157] Our reasons are much the same as those relied upon for the legitimate expectation argument. In brief summary, there was no clear and unambiguous promise or representation made on behalf of the Comptroller; it was not reasonable61 The authorities have been discussed in recent times in New Zealand Association for Migration and Investments Inc v Attorney-General [2006] NZAR 45 (HC) at [147]–[159] and GXL Royalties Ltd v Minister of Energy [2009] NZAR 478 (HC) at [43]–[45]. In the appeal from the latter decision the substantive relief issue was not discussed: GXL Royalties Ltd v Minister of Energy [2010] NZAR 518 (CA).62 See the comprehensive discussion of this topic by Wild J in Challis v Destination Marlborough Trust Board Inc [2003] 2 NZLR 107 (HC) at [104]–[108].in the circumstances for TNZ to rely on the ambiguous correspondence and the telephone discussion with Mr Wakefield; and the assessment of liability for excise duty under s 88(2) was substantially a matter of obligation on the part of the chief executive. It is well settled that the doctrine of estoppel cannot prevent a public body or official carrying out statutory duties.Conclusions and disposition[158] We conclude that the process of blending butane with motor spirit at therespondent's facility constitutes the "manufacture" of motor spirit for the purposes of the Customs and Excise Act 1996. It follows that the appeal must be allowed. If a formal declaration is required, the parties may file a memorandum.[159] We do not accept that the respondent had a legitimate expectation that the motor spirit produced by the blending of butane and motor spirit would not be subject to further duty. Nor do we accept that the appellant is estopped from recovering any further duty in consequence of the blending process. It follows that the cross-appeal must be dismissed.[160] It is not clear to us whether the interim order made by Gilbert J on 16 March 2012 remains in force. If any issue arises in that respect, counsel may raise it by memorandum.[161] The appellant is entitled to costs on both the appeal and cross-appeal as for a standard appeal and cross appeal on a band A basis with usual disbursements. We certify for second counsel.[162] We understand the appellant has yet to consider the final amount to be assessed for duty and any additional duty imposed under s 87. Without in any way directing or constraining this assessment, there appear to be substantial grounds raised by the respondent to support a case for the remission or refund of additional duty under s 87.Solicitors:Crown Law Office, Wellington for AppellantJones Young, Auckland for Respondent