Pr. Commissioner of CGST & Central Excise, .... Respondent MumbaiII 9th Floor, Piramal Chambers Lalbaug, Parel, Mumbai 400 012. Appearance: Ms. Mansi Patil, Advocate for the Appellants Shri Shambhoo Nath, Special Counsel for the Respondent HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) FINAL ORDER NO. A/86700/2025 Date of Hearing: 08.05.2025 Date of Decision: 23.10.2025 Per: M.M. PARTHIBAN This appeal has been filed by M/s Hindustan Petroleum Corporation Limited (HPCL), Refinery Division, Mahul, Mumbai (herein after, referred to as "the appellants", for short) assailing the OrderinOriginal No. 22/SRK/PC/MII/201516 dated 08.01.2016 (herein after, referred to as "the impugned order") passed by the Principal Commissioner of Central Excise, MumbaiII, Mumbai. 2.1 Brief facts of the case, leading to this appeal, are summarized herein below: 2.2. The appellants herein is engaged inter alia, in the manufacturer of petroleum products by refining of crude petroleum and marketing of 2 E/85335/2016 various finished products viz., HighSpeed Diesel (HSD), Motor Sprit (MS), Superior Kerosene Oil (SKO), Aviation Turbine Fuel (ATF), Lube Oil etc. by classifying the aforesaid products under Chapter 25, 27 of the First Schedule to the Central Excise Tariff Act, 1985. The appellants are registered taxpayers holding Central Excise Registration No. AAACH1118BXM010 for manufacture of aforesaid excisable goods on payment appropriate Central Excise duty and for compliance with Central Excise statue. 2.3 The excisable goods viz., HSD, MS and SKO manufactured at Mahul refinery are transported to their different depots situated at Vashi, Pakni, Lone and Hazarwadi through pipelines called MumbaiPuneSolapur pipeline (MPSPL) from where sales to retailers takes place. The pipeline transfers of aforesaid goods on payment of applicable duty and dispatch of such goods are made by the appellants in the form batch of shipments, following a sequential producttoproduct pumping method, whereby at any one point of time only one product in the pipeline is pushed through. However, upon completion of pumping of one product, say HSD or MS, the other product i.e., SKO is introduced in the pipeline which pushes the other product without any positive segregation. Therefore, the line connected of each consignment of the products may comprise of a mixture of two products, during the time of shifting from one product to another, which is known as "interface" or "transmix" at the interjunction of each batch of product. Such interface/transmix/intermix products are taken into specific tanks at the destination as per laid down safety norms and operational procedures as prescribed under Industry Quality Control Manual (ICQM). 2.4 As a conventional practice, the appellants were using SKO as an interface between MS and HSD, since intermixing of MS and HSD or HSD and MS will contaminate the entire product. The Department had interpreted that the offsetting of gain observed in one product say MS/HSD against the loss observed in another product say SKO, though the duty payable on the industrial SKO is higher than the duty payable on SKO meant for Public Distillation System (PDS), the duty payable on gain/surge shall be the duty payable on MS/HSD. Accordingly, show cause proceedings were initiated for recovery of Central Excise duty for the mixed part of SKO and MS/HSD, as the case may be, quantified at higher values, and duty was demanded for an amount of Rs.6,21,19,064/ (Rs.1,72,75,988/ on account of SKO interfaced in MS and Rs. 4,48,43,076/ on HSD) along with 3 E/85335/2016 interest under Section 11A(4)/11A(1) of the Central Excise Act, 1944 by invoking the extended period of time and for imposition of consequent penalty under section 11AC ibid read with Rule 25 of the Central Excise Rules, 2002 vide Show Cause Notice (SCN