In Brief
The Supreme Court examined whether Oil Marketing Companies (BPCL, IOCL, HPCL) correctly valued inter-company petroleum sales under the Memorandum of Understanding (MOU) at Import Parity Price for excise duty purposes. The Court held that the price alone was not the sole consideration for these sales; the real purpose was ensuring smooth, uninterrupted supply nationwide and avoiding disruption. Therefore, the reduced inter-company price did not qualify as transaction value under Section 4(1)(a) of the Central Excise Act, 1944. The Court also found that the extended period of limitation and penalty were incorrectly invoked, as neither suppression nor misrepresentation was proven. The demand was set aside, and other related appeals were remanded for fresh adjudication.
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