Vivek Kejriwal Managing Director Sunvik Steels Ltd vs BANGALORE-II

Central Excise Appeal No. E/25279, 25280/2013


CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2

Central Excise Appeal No. 25279 of 2013

(Arising out of Order-in-Appeal Nos. 324-325/2012-CE dated
17.10.2012 passed by the Commissioner of Central Excise (Appeals –
I), Bangalore.)

Sri Vivek Kejriwal,
Managing Director,
M/s. Sunvik Steels Ltd.
Survey No. 59-72, Jodidevarahalli,
Kallambella Hobli, Sira Taluk,
Tumkur – 572 125,
Karnataka.
Appellant(s)

VERSUS
Commissioner of Central Excise,
Bangalore – II Commissionerate
P. B. No. 5400, C. R. Building,
Queens Road,
Bangalore – 560 001.
Respondent(s)
WITH

Central Excise Appeal No. 25280 of 2013

(Arising out of Order-in-Appeal Nos. 324-325/2012-CE dated
17.10.2012 passed by the Commissioner of Central Excise (Appeals –
I), Bangalore.)

M/s. Sunvik Steels Ltd.
Survey No. 59-72, Jodidevarahalli,
Kallambella Hobli,
Sira Taluk,
Tumkur – 572 125.
Karnataka.
Appellant(s)

VERSUS
Commissioner of Central Excise
Bangalore – II Commissionerate
P. B. No. 5400, C. R. Building,
Queens Road,
Bangalore – 560 001.
Respondent(s)

APPEARANCE:


Shri Raghavendra B. Hanjer, Advocate for the Appellant
Shri Murali Kanipakam, Superintendent (AR) for the Respondent

CORAM: HON'BLE MRS R. BHAGYA DEVI, MEMBER
(TECHNICAL)
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Final Order No. 21283 - 21284 /2026

DATE OF HEARING: 11.09.2026
DATE OF DECISION: 30.10.2026

PER : R. BHAGYA DEVI


Briefly the facts are M/s. Sunvik Steels Pvt. Ltd. are
engaged in the manufacture of Sponge Iron, MS Ingots / Billets
and TMT Rods. On investigation, it was found that appellant was
liable to pay excise duty to the extent of Rs.27,88,152/- and
accordingly, the original authority on verification of the
documents and records, confirmed demand of the above amount
and imposed penalty under Section 11AC of Central Excise Act,
1944 and also imposed penalty on Shri Vivek Kejriwal, Managing
Director of the appellant-company in terms of Rule 26 of the
Central Excise Rules, 2001 read with Central Excise Rules, 2002.
On appeal, the Commission (Appeals) upheld the order of
Original Authority.

2. The Learned Counsel submits that the Commissioner
(Appeals) in the impugned order has alleged that the appellant
had removed 478.2 metric tons of TMT bars and rods without
payment of duty and these allegations are based on mere
private records without corroborating evidences to prove
clandestine removal. He further submits that only on assumption
that certain quantity of unaccounted MS Ingots was produced
during the disputed and same has been utilized for manufacture
and clearance of final products and were clandestinely removed
is the allegation in the impugned order. He further submits that,
however, the contentions and objections of the appellant in their
grounds of appeal have not been considered. He submits that
they had contended that Annexure D1 and D2, based on which,
duty was demanded had not been supplied to them initially. It is
submitted that the entire demand is based on the entries found
in Diary 2006 titled as ‘Executive Diary’ and the excess
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production of MS Ingots is worked out at 513.227 metric tons
and it is alleged that these were used for unaccounted
manufacture of 478.2 metric tons of TMT rods.

2.1 He further submits that for arriving at the weight of ingots,
a uniform weight of 1.75 Kgs. per inch has been worked out;
while in reality, there is always a difference in weight between
one ingot and another ingot and no two ingots are identical in all
respects. Further, weight of the ingot is not only dependent on
its length but also dependent on the diameter of the mould
which is used to pour the liquid metal and that moulds of
different sizes are used by them in their unit; hence, the basis
adopted for arriving at the shortage is unscientific and without
any basis and it is clearly proved that it is only an assumption
and also there is no allegation of diversion or sale of ingots
illegally by the appellant. In view of the above, it is submitted
that the entire order which is based on one private diary for
unaccounted MS Ingots without any other collaborative
evidences, cannot be sustained.

2.3 The learned counsel placed reliance on the following
decisions:
Resha Wires Pvt. Ltd. vs. CCE, Bangalore: 2006 (74)
•
RLT 184

• Kedarnath Silk Mills: 2006 (195) ELT 58

• Ruby Chlorates (P) Ltd. vs. CCE, Trichy: 2006 (204)
ELT 607 (Tri.-Chennai.)

• J.V. Strips Ltd. vs. CCE, Rohtak: 2006 (194) ELT 237
(Tri.-Del.)

• Rochees Watches Ltd. vs. CCE, Jaipur: 2006 (197)
ELT 218 (Tri.-Del.)

• Shangrila Latex Industries Pvt. Ltd. vs. CCE: 2006
(194) ELT 106 (Tri.-Mum.)

3. The Learned Authorized Representative (AR) on behalf of
the Revenue reiterating the findings of the Commissioner
(Appeals) submits that the Executive Diary containing the details
of TMT bars removed during disputed period was seized from the
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factory premises where Mahazar dated 29.07. 2008. He also
submits that the person in-charge of the factory in their
statements and the Managing Director of the appellant-company
have accepted the statement of Sri A. S. Upadyaya in-charge of
MS division who admitted short accountable of MS Ingots in their
stock account and clandestine clearance of TMT bars as recorded
in the Diary 2006 titled as ‘Executive Diary’ when compared with
the removal shown in the invoices during the period. It was seen
that TMT rods to the tune of 478.2 metric tons was not
accounted in the books of accounts during the disputed week. He
also submits that the statements which are evidentially
documents were never retracted at any given point of time and
hence, the question of cross-examination also does not arise.
Accordingly, since the ‘Executive Diary’ proved the clandestine
removal, the demand of Central Excise duty and imposition of
penalty is justified and needs to be sustained.

4. Heard both the appellant and the Revenue and also
perused the relevant documents/records placed before me. The
only question to examine is whether there was clandestine
removal during the disputed period from 19.07.2008 to
29.07.2008 and whether the records recovered during
investigation was sufficient enough to prove clandestine removal
of the final products. It is an admitted fact that the appellant
manufactured Sponge Iron, M.S. Ingots /Billets and TMT Rods
etc.; and the raw material for these products are iron ore, coal,
limestone, M.S. scrap etc.; which are further used for
manufacture of MS ingots and these MS ingots are used in the
production of TMT Rods/ Bars. The allegations set-out in the
show-cause notice is that the appellant has suppressed the
actual production of TMT Rods/Bars and cleared the same
clandestinely. The Commissioner (Appeals) in the impugned
order based on the investigations observed as follows:

“13. It is also found that on scrutiny and comparison of the details
record in the documents seized, with the statutory records
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maintained at the factory, the officers of DGCEI came to the
conclusion that the appellant have suppressed the production of
ingots which ultimately used in the manufacture of the resultant
final product namely TMT Rods/ Bars. The excess quantity of
ingots found short accounted during the period 02.05.2008 to
30.06.2008 was 503.227 metric tons. Further on captive
consumption of the said quantity of ingots, it was found that there
was manufacture and removal of the finished goods namely TMT
Rods/Bars to the tune of 478.200 MTs, clandestinely during
19.07.2008 to 29.07.2008. The quantity of unaccounted
production/consumption of the ingots were arrived based on the
records seized namely made-up file and duplicate book/ notepad
etc; and the unaccounted removal of TMT Rods/Bars from the
document titled ‘Executive Diary’. The facts recorded in the
incriminating documents under seizure were vouched by the
persons working in the appellants factory and related business
premises including the Managing Director of the appellant
Company in their statements given under Section 14 of CEA 1944
before the officer of DGCEI. The seized records and documents
form the tangible evidences to confirm the above facts and no
separate evidences are required to corroborate the same as
contended by the appellant so long as they have not produced
any contrary facts or evidences. Therefore, the contention of the
appellant that the seized ‘Executive Diary’ shows only an
indication of the orders placed on the company for a particular
day and not the clandestine clearance made by the appellants on
that particular date is an afterthought as no supportive evidence
has been put forth by the appellant. In view of these various
judgments/citations furnished by the appellants are not applicable
in this case”.

5. Now let’s examine the records that the authorities found
incriminating to allege the clandestine removals. The prime
document is the “Executive Diary” which is reproduced below:
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6. The “Executor Diary” shows the date, the customer’s
name, description, quantity removed, invoice details, date of
removal etc. As seen from these data, for instance, on
19.07.2008 a quantity of 20 for Lakshmi Steel under Invoice
No.1536 dated 19.07.2000 is shown, while in some of the
columns, there is no date, no name of the customer but the
description and quantity is mentioned without invoice number.
Such details are taken as clandestine removal by the Revenue.
With regard to this the dispatch, Executive of the appellant in his
statement submits that ‘I admit that against entry proper invoice
have been raised only in respect of few and for the rest no
invoice has been made, I notice that invoice raised from the
factory for the relevant period have been seized by your officers
today I am to state that clearance of TMT bar without proper
invoices has been made as per the instruction from the city
office only against----”

7. The Managing Director has in his statement has stated that
“I too have examined the recordings made in the diary 2006
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titled “Executive Diary” and the corresponding invoices relating
to the clearances of TMT bars during the period from 19.07.2008
to 29.07.2008, with regard to the entries where invoices cannot
be correlated, I cannot immediately furnish any explanation in
this context you may refer to my answer to your question
number 7 above and the question 7 deals with MS ingots
recorded in their private records and the Managing Director has
stated that the excess quantity he could not explain but stated
that they have not removed MS ingots on sale basis to anyone
but have only captively consumed in the manufacture of TMT
bars. Other than this, there is no evidence placed on record
either regarding electricity consumption, transport details,
dispatch details or the details of the customers to whom it is sold
to show that these goods have been clandestinely removed.
Therefore, based on the “Executive Diary” and the above
statements, the question of proving clandestine removal cannot
be justified.

8. The other documents relied upon by the Revenue is the
made-up file and the Commissioner observed as follows:

“18. The aspect of clandestine removal has been elaborately dealt
by the original authority at Para 44 to 49 of the findings in the impugned
order. As per the said findings, the whole investigation by the DGCEI
originates from the documents namely note pad titled duplicate book",
"executive diary" & "made up file" seized at the factory premises of
appellant on 29.07.2008. This is followed by the statements given by
Shri. A. S. Upadhyaya, Shri Rajesh Sharma, & Shri. George Mathew, the
employees of the company working in the factory, and they have adm
admitted that what is entered in the above said documents reflect the
actual production/ clearance of the ingots and the TMT Bars and the
quantities entered in the RG 1, as per the directions of Shri. Kejrival, the
MD of the company, was less than the actual. The Statements of the
employees were shown to Shri. Vivek Kejrival Managing Director of the
company, who on perusal of the documents, has accepted that the
depositions made by the employees were correct and there was short
accountal of 513.227 MTs of ingots in the statutory books and MS Ingots
were consumed with in the factory for production of TMT Bars. The
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quantity of TMT Bars manufactured and cleared without payment of duty
clandestinely has been worked out in detail in the annexures titled D1 &
D2 and the original authority has rightly upheld that the quantity of
478.2 MTs TMT Bars/Rods produced using 513.227 MTs of unaccounted
of ingots and cleared without payment of excise duty were arrived at
based on the documents/records seized from the factory premises of the
appellant. The figures thus arrived at are corroborated by the employees
of the appellant and the valuation of the said finished goods namely TMT
Bars since cleared clandestinely has been done rightly by applying the
provisions of Rule 4 of Central Excise Valuation (Determination of price
of excisable Goods) Rules, 2000 read with section 4 of the Central Excise
Act 1944. While confirming the demand of duty on the unaccounted
removal of TMT Bars/Rods the original authority has cited various
decisions to negate the appellants contentions listed in para 11 above. I
have perused the same and agree with the original authority.”

Thus, from the above findings, I find that the short accountal
was with regard to MS ingots to the extent of 513.227 MTS. It is
an admitted fact that these were not the final products and were
captively consumed; hence, the allegation that these short
accounted of MS Ingots were used in the manufacture of the
final products TMT Rods/Bars is just imaginary without any
corroborative evidences on record. Therefore, neither the
Executive Diary nor the made-up file and the statements by
various employees and the Managing Director have been
corroborated with other evidences as discussed above to prove
clandestine removals during the said period. Thus, the
department has not discharged any positive evidence to prove
clandestine removals of TMT bars/rods.

9. The Hon’ble High Court of Madras in the case of
Commissioner of C. Ex., Coimbatore vs. SVA Steel Re-
Rolling Mills Ltd.: 2018 (362) E.L.T. 411 (Mad.) dated 15-
11-2017, in similar situations, has held as follows:

“7. The burden to prove clandestine manufacture and removal is on the
revenue. Direct evidence of clandestine removal would rarely be available
and the standard of proof has to be necessarily based on preponderance
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of probabilities. Conjunctures and surmises cannot be the basis of proof,
when clandestine removal is alleged and for establishing the said charge,
there should be positive evidence. Therefore, when the department
alleges clandestine production and removal of goods, without due proper
accounting in the records and without payment of duty, the burden of
establishing the allegation lies heavily on the department. In the case on
hand, the department, has not discharged the burden.”

10. In view of the above, since there is no positive evidence on
to prove clandestine removal, I find that the impugned order
cannot be sustained and accordingly the same is set aside along
with the penalties imposed on the appellant and the Managing
Director.

Appeals are allowed

(Order was pronounced in Open Court on 30.10.2026.)




(R. BHAGYA DEVI)
MEMBER (TECHNICAL)
Rv

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