BHARAT PETROLEUM CORPORATION LTD. versus COMMISSIONER OF CENTRAL EXCISE NASHIK COMMISSIONERATE

Citation: [2025] 1 S.C.R. 1987 · Decided: 20-01-2025 · Supreme Court of India · Bench: ABHAY S. OKA
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Judgment (excerpt)

[2025] 1 S.C.R. 1987 : 2025 INSC 84
Bharat Petroleum Corporation Ltd.  
v. 
Commissioner of Central Excise Nashik Commissionerate
(Civil Appeal No. 5642 of 2009 
With 
Civil Appeal No(s). 8025-27 of 2010, Civil Appeal No. 5686 of 2014, 
Civil Appeal No. 9838 of 2017, Civil Appeal No. 5516 of 2019 and 
Civil Appeal No. 10890 of 2024)
20 January 2025
[Abhay S. Oka* and Pankaj Mithal, JJ.]
Issue for Consideration
Whether while computing excise duty under the Central Excise 
Act, 1944 on sale of petroleum products, price of the products can 
be considered as the sole consideration and whether the revenue 
was entitled to invoke extended period of limitation u/s.11A(1) of 
the Act and to levy a penalty u/s.11AC of the Act?
Headnotes†
Central Excise Act, 1944 – Valuation of goods-price as sole 
consideration of goods:
Held: The Memorandum of Understanding (MOU) dated 31st 
March 2002 by and between the Oil Marketing Companies 
(OMCs) incorporates mutual arrangements made by MNCs for 
an uninterrupted supply of petroleum products so that MNCs can 
further sell the products to their dealers – By no stretch of the 
imagination, it can be said that the price fixed under the MOU 
was the sole consideration for the sale by one OMC to the other – 
Further, there is no specific finding recorded in the decision of the 
Tribunal in the case of Hindustan Petroleum Corporation Ltd. that 
the price was the sole consideration for the sale – The Tribunal 
has not adverted to the question of whether the third condition 
in s.4(1)(a) of the Central Excise Act was complied with – Thus, 
even assuming there is a merger of the said decision with the 
order of this court in the said case, the order of this Court does not 
constitute a binding decision on the issue of compliance with such 
condition – The finding of the fact recorded by the Tribunal in Civil 
* Author
1988
[2025] 1 S.C.R.
Supreme Court Reports
Appeal No. 5642 of 2009 that price was not the sole consideration 
cannot be faulted with. [Paras 28-30]
Central Excise Act, 1944 – Applicability of extended period 
of limitation under the proviso to s.11-A(1) of the 1944 Act:
Held: No detailed reasons have been recorded in support of 
invoking the extended period of limitation under the proviso to 
sub-section (1) of s.11-A by the Commissioner in his order – The 
department was aware of the MOU even before the date on 
which the show cause notice was issued – MOU was referred to 
in the decision of the Tribunal in the case of Hindustan Petroleum 
Corporation Ltd., thus, the ground of suppression of MOU taken 
to support the invocation of the extended period of limitation 
cannot be sustained – The second ground is that BPCL made 
the department believe that dual pricing was adopted as per the 
directions of the Government – It is not alleged in the show cause 
notice that any such misrepresentation was made by BPCL – The 
reply to the show cause notice submitted by the BPCL contains 
no such representation – Even in the order, no specific reference 
has been made to any such contention raised by BPCL or other 
OMCs – Hence, both the grounds in support of invoking an extended 
period of limitation cannot be sustained, and only on that ground, 
the demand cannot be sustained – Therefore, the said appeal 
preferred by the BPCL deserves to be allowed by setting aside the 
entire demand on the ground that the extended period of limitation 
could not be invoked – The other appeals to be remanded to the 
Tribunal for fresh adjudication. [Paras 32-34, 38, 39]
Central Excise Act, 1944 – Applicability of s.11AC:
Held: In this case, there is no allegation made by the Revenue 
of fraud, collusion or any wilful mis-statement on the part of the 
appellant – The stand taken is that the MOU was suppressed, and 
therefore, s.11AC will apply – In view of the findings recorded above 
on the issue of the invocation of the extended period of limitation, 
the penalty could not have been imposed. [Paras 36, 38]
Case Law Cited
CCE v. Grasim Industries Ltd. [2018] 6 SCR 1099 : (2018) 7 SCC 
233; CCE v. Ispat Industries Ltd. [2015] 15 SCR 259 : (2016) 1 
SCC 631; CCE v. CERA Boards and Doors [2020] 11 SCR 471 : 
[2025] 1 S.C.R. 
1989
Bharat Petroleum Corporation Ltd. v.  
Commissioner of Central Excise Nashik Commissionerate
(2020) 9 SCC 662; D.J. Malpani v. CCE [2019] 6 SCR 925 : (2019) 
9 SCC 120; V.M. Salgaocar and Bros. Pvt. Ltd. v. CIT [2000] 2 
SCR 1169 : (2000) 5 SCC 373; Kunhayammed & Ors v. State 
of
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