AIROnline 2025 SC 28

Supreme Court Of India

Hon'ble Judge(s): Abhay S. Oka, Pankaj Mithal , JJ

(A) Central Excise Act (1 of 1944) , S.4— Excise duty - Demand for - Legality - Real consideration for MOU was to ensure an uninterrupted supply to all the OMCs at various places in India - Price fixed under the MOU was not sole consideration for the sale by one OMC to the other - S.4 (1) (a) of Act of 1944 was not applicable - Computation and demand of excise duty was erroneous since price was not the sole consideration for sale. In the instant case , MOU was signed by OMCs to sell and purchase petroleum products among themselves at the Import Parity Price (IPP). The MOU aimed to ensure smooth supply and distribution, avoid disruptions, and save transportation costs. Show-cause notices were issued to OMCs, proposing to calculate excise duty based on the price sold to dealers, not the IPP. Held, where price was not the sole consideration for sale, clause (a) of Section 4(1) would not apply. For applicability of clause (a) of Section 4(1), the following conditions must be fulfilled: a. The assessee sells the goods for delivery at time and place of the removal; b. The assessee and the buyer are not related; and c. The price is the sole consideration for the sale. Only if all three conditions are fulfilled, the value of the goods for the purpose of computation of excise duty will be the transaction value. In a given case, if it is ....