State-run refiner Bharat Petroleum Corporation (BPCL) has received an order from the Commissioner of Central Tax and Central Excise, Kochi, for an excise duty demand along with interest amounting to ₹1,816.65 crore in relation to valuation disputes linked to its Kochi refinery operations.
In its regulatory disclosure, BPCL said the order was passed on February 21, 2026 and pertains to transactions undertaken during the period September 2004 to May 2010.
The demand comprises excise duty of ₹476.94 crore, interest of ₹1,339.70 crore, and a penalty of ₹95,000.
Where does the demand stem from?
The company said the demand arises from 19 show cause notices issued by the central excise department concerning valuation under the Central Excise Valuation Rules, 2000, in respect of Kochi Refineries Limited (KRL), which was subsequently merged with BPCL.
According to the order, the adjudicating authority held that BPCL and KRL were “related persons” under excise law and disallowed the transaction value adopted by the company. The department applied valuation on the basis of the highest price for the entire fortnight across all clearances, rather than the pricing methodology used by BPCL.
Post-merger, BPCL had adopted valuation based on the highest quantity depot price, but the excise authority rejected this approach in the adjudication.
What did the company say?
“BPCL will analyse and file an appeal against the said order to the Hon’ble CESTAT,” the company said in its filing.
The company did not disclose any provision made in its books for the demand, nor did it indicate the timeline for filing the appeal.