1
: In a saucepan, combine evaporated milk, water, butter, salt and pepper. Bring to a boil. Remove from heat and stir in flour all at once, stirring until dough forms a ball. Return to medium heat, and cook, stirring for 2 to 3 minutes.
2
: Remove from heat and transfer dough to a bowl. Cool mixture 5 minutes. Add 3 eggs, one at a time, beating each one in completely. Beat the fourth egg separately and add approximately half of egg (use remaining beaten egg to lightly brush puffs). Stir in both cheeses and nutmeg.
3
: Drop dough (about 4 across and 6 down) in 1 ½ tbsp (22 mL) mounds onto a parchment-lined baking sheet. Brush lightly with remaining beaten egg. Bake in a preheated 400ºF (200ºC) oven for 28 to 30 minutes, until puffed and golden brown. Remove to a wire rack. Serve warm or at room temperature.