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mix flour, 1/2 cup confectioners sugar, baking powder, salt and nutmeg in small mixing bowl. set aside.
combine milk, water, crisco oil and lemon peel in medium saucepan. heat to rolling boil over medium-high heat. add flour mixture all at once. beat with wooden spoon until mixture pulls away from sides of pan into a ball.remove from heat; cool slightly. add eggs, one at a time, beating after each addition.
heat 2 to 3 inches crisco oil in deep fryer or large saucepan to 350°F.
drop dough by tablespoonfuls into hot crisco oil. fry 3 or 4 puffs at a time, 4 to 6 minutes, or until golden brown, turning over several times. drain on paper towels. sprinkle top of each puff with confectiners sugar.