2025-VIL-02-SC-CE
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CENTRAL EXCISE Supreme Court Cases

Central Excise - Transaction Value, Extended Period of Limitation, Penalty - Appellant and other Oil Marketing Companies (OMCs) entered into a Multilateral Product Sale-Purchase Agreement (MOU) to ensure smooth supply and distribution of petroleum products – Revenue issued Show Cause Notices to the OMCs alleging that they should have considered the price at which they sold petroleum products to their own dealers rather than the price at which they sold to each other under the MOU (Import Parity Price or IPP) for computation of excise duty – Whether the price (IPP) was the sole consideration for the sale of petroleum products between the OMCs under the MOU – Demand invoking extended period - HELD - the object of the MOU is not to sell petroleum products on a commercial basis to other OMCs. The real object is to ensure that each OMC gets a smooth supply of petroleum products and any disruption of supply is avoided. Therefore, the emphasis is on allowing individual OMCs access to each other’s products and facilitating the sale of petroleum products to their respective dealers/customers. The sale of products under the MOU is for the benefit of the respective business activities of the OMCs - The price was not the sole consideration for the sale under the MOU. The real purpose of the MOU was to ensure smooth and uninterrupted supply of petroleum products across India, irrespective of whether an OMC had a refinery in a particular region. The MOU incorporated mutual arrangements between the OMCs for this purpose and the price fixed under the MOU was not the sole consideration for the sale - the grounds relied upon by the Revenue to invoke the extended period of limitation, namely, suppression of the MOU and misrepresentation that the pricing was as per Government directives, are not sustainable. The Department was already aware of the existence of the MOU and there was no specific allegation that the appellant misrepresented the pricing as per government directives. Hence, the extended period of limitation could not be invoked - since there were no allegations of fraud, collusion, or wilful mis-statement or suppression of facts by the appellant, the penalty under Section 11AC could not be imposed - The impugned orders, including the order passed by the Commissioner are set aside and the other appeals are remanded to the Tribunal for fresh adjudication – answered in favour of assessee
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