Bharat Petroleum Corporation Ltd (BPCL) has been issued an order by the Commissioner of Central Tax and Central Excise in Kochi, demanding a total of Rs 1,816.65 crore. This amount includes an excise duty demand of Rs 476.94 crore, along with interest of Rs 1,339.70 crore and a penalty of Rs 95,000, as disclosed by the government-owned company in a filing with the BSE. BPCL has stated that it will review the order and appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
The dispute involves 19 Show Cause Notices (SCNs) that were awaiting adjudication by the Central Excise Department, covering the period from September 2004 to May 2010 under the Central Excise law. The Adjudicating Authority has now issued a ruling on these SCNs through an order dated February 21, 2026, according to the public sector undertaking (PSU). A significant part of the demand relates to the pre-merger phase of Kochi Refineries Ltd (KRL) from September 2004 to August 2006, which was under adjudication.
BPCL revealed that the Adjudicating Authority determined BPCL and KRL as related entities, disallowing the use of Refinery Gate Price for excise valuation. Instead, the department’s valuation under Rule 11 read with Rule 9 of Central Excise Valuation Rules, 2000 was deemed valid. Post-merger, BPCL – Kochi Refinery utilized Rule 7 of Central Excise Valuation Rules, 2000 (highest quantity depot price), but the department applied the highest value of the entire fortnight to all clearances under Rule 11 read with Rule 7 of Central Excise Valuation Rules, 2000.
Following the tax demand announcement, BPCL’s shares surged by 1.83% to Rs 372.55 at the close of trading hours.
