Undervaluation of goods – Big conspiracy by Big Four :
Four companies entered into a conspiracy to cheat the government. They were all manufacturing the same products. In a well-hatched conspiracy they started selling their products among themselves at mutually agreed prices, which would later be sold to consumers at higher prices thereby cheating the Central Excise department of precious excise duty amounting to over two hundred Crores of rupees! You will be eager to know the names of these big-time fraudsters? Here they are - M/s. HPCL, M/s. IOCL, M/s. BPCL and M/s. IBPL. The AG found fault with the valuation as
Such a price cannot be considered the transaction value for section 4 since this price was adopted for oil exchange transactions alone and the product sharing agreement to sell products at lower prices for the benefit of each other clearly establishes mutuality of interest among oil companies.
Even though the Department submitted that there was no extra consideration beyond the agreed price, CAG has reported to Parliament that the oil companies are cheating the excise department and but for a vigilant AG, the Petroleum Ministry of the Government of India (not Pakistan) would have become richer. Now thanks to the AG, this case will run through various courts – at the cost of the Government of India.