Custom, Excise & Service Tax Tribunal
Mylan Laboratories Ltd vs Visakhapatnam - G S T on 25 February, 2026
(1)
E/30097 & 30116/2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. - I
Excise Appeal No. 30097 of 2018
(Arising out of Order-in-Appeal No. VIZ-EXCUS-001-APP-138-17-18 dt.30.10.2017 passed
by Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam)
M/s Mylan Laboratories Ltd
Unit-8, G. Chodavaram Village, Pusapatirega (M), ......Appellant
Vizianagaram, Andhra Pradesh - 535 204
VERSUS
Commissioner of Central Tax
Visakhapatnam - GST
Port Area, Visakhapatnam,
......Respondent
Andhra Pradesh - 530 035 AND Excise Appeal No. 30116 of 2018 (Arising out of Order-in-Appeal No. VIZ-EXCUS-001-APP-139-17-18 dt.31.10.2017 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam) M/s Mylan Laboratories Ltd Unit-8, G. Chodavaram Village, Pusapatirega (M), ......Appellant Vizianagaram, Andhra Pradesh - 535 204 VERSUS Commissioner of Central Tax Visakhapatnam - GST Port Area, Visakhapatnam, ......Respondent Andhra Pradesh - 530 035 Appearance Shri Y. Ravi Kumar, Advocate for the Appellant.
Shri M. Anukathir Surya, AR for the Respondent.
Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30117-30118/2026 Date of Hearing: 11.11.2025 Date of Decision: 25.02.2026 [Order per: A.K. JYOTISHI] M/s Mylan Laboratories Ltd (hereinafter referred to as appellants) are in appeal against OIA dt.30.10.2017 in Appeal No. E/30097/2018. They are also in appeal against OIA dt.31.10.2017 in Appeal No. E/30116/2018.
(2)E/30097 & 30116/2018
2. The issue involved in both the appeals is that the appellants are 100% EOU and are engaged in manufacturing of bulk drugs. Further, as the appellants are mostly involved in exports, Cenvat credit taken on the inputs remained unutilized and therefore, in terms of Rule 5 of Cenvat Credit Rules, 2004 (CCR) read with Notification No.27/2012 dt.18.06.2012, the appellants claimed refund. This refund claim was filed on account of both physical exports, as also for the deemed exports, wherein the goods were cleared from the appellant's unit to other 100% EOU. The Refund Sanctioning Authority (RSA) allowed refund only to the extent of Cenvat credit availed in relation to physical exports and in respect of Cenvat credit availed in relation to deemed exports was not refunded in cash and instead directed to remain posted in Cenvat credit account of the appellant. The adjudicating authority relied on the definition of 'export', as defined under Customs Act, which meant taking goods physically out of India to a place outside India and the fact that the term 'export' has not been otherwise defined under the CCR. He has also relied on the judgment in the case of M/s BAPL Industries Ltd Vs UOI [2007 (211) ELT 23 (Mad)].
3. On appeal, the Commissioner (Appeals) upheld the original order of the RSA. The Commissioner (Appeals) also distinguished the reliance placed by the appellant in the case of CCE Vs Shilpa Copper Wire Industries Ltd [2011 (269) ELT 17 (Guj)], CCE Vs NBM Industries [2013 (29) STR 208 (Guj)] and El Dupont India Pvt Ltd Vs UOI [2014 (305) ELT 282 (Guj)] on the facts that the issue in the said case was not relating to clearance from an EOU to another EOU.
4. Since the issue in both the appeals is one and the same, we propose to take up both the appeals together for hearing and disposal.
5. Learned Advocate for the appellant has mainly contested that refund under Rule 5 of CCR cannot be denied on deemed exports and that the issue of refund of credit on clearances from one EOU to another EOU is no longer res integra. Moreover, the explanation inserted to Rule 5 is prospective in nature. He has also submitted that the appellate authority should not have rejected the submissions made by them as regard the issue being no longer res integra in the light of the judgment of Hon'ble Gujarat High Court in the case of CCE Vs Shilpa Copper Wire Industries Ltd (supra) as the Revenue's appeal against the said judgment has been dismissed by the Hon'ble (3) E/30097 & 30116/2018 Supreme Court vide its judgment in the case of Commissioner Vs Shilpa Copper Wire Industries Ltd [2018 (361) ELT A84 (SC)]. He has also submitted that certain case laws, relied upon by the Commissioner (Appeals), are not relevant to the case. He has also heavily contested that the amendment brought in by way of insertion of explanation 1(1A) to Rule 5 does not have any impact on refund of Cenvat credit relating to deemed exports as it has prospective implication and cannot be applied retrospectively. He has also relied on certain other judgments in support that deemed exports are covered within the purview of Rule 5 for the purpose of cash refund.
6. Learned AR, on the other hand, has reiterated the findings of the Commissioner (Appeals) and submitted that in terms of clear expression of the provision under Rule 5 and Notification No.27/2012, only actual exports are required to be considered for the period prior to the amendment. He has further clarified that explanation 1(1A) inserted vide Notification No.06/2015 dt.01.03.2015, is by way of clarification, whereby, the expression 'export goods' referred to in Rule 5 of CCR means 'any goods, which are to be taken out of India to a place outside India'. Since this is clarificatory in nature, it will have retrospective effect and admittedly, the goods have not been taken out of India but have been supplied to another EOU in India. Therefore, it will not be covered within the expression of 'export goods'.
7. Heard both sides and perused the records.
8. We find that there are three issues, which need to be decided in these appeals, as under.
a) Whether only actual exports are to be considered for grant of refund amount in terms of Rule 5 of CCR or even deemed exports have to be considered and
b) Whether the amendment vide Notification No.06/2015 dt.01.03.2015 has got retrospective effect or otherwise.
c) Whether the reliance placed by the appellants on the case of Shilpa Copper Wire Industries Ltd (supra) is applicable in this case or otherwise.
9. Insofar as (a) is concerned, we find that the refund of Cenvat credit is admissible in terms of Rule 5 of CCR and there is a procedure and formula (4) E/30097 & 30116/2018 for computing the same. This formula, inter alia, takes into account export turnover of the goods and the export turnover of the goods means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking. Similarly, Notification No.27/2012 dt.18.06.2012, which has been issued in terms of power conferred by Rule 5 of CCR, the claimant of the refund eligible under Rule 5 is governed by certain procedure, safeguards, conditions and limitation etc. In the said notification, expression 'goods exported' has also been referred to. Therefore, the expression 'export' used in the notification has to be read in conjuncture with the basic provision under which the said notification has been issued. The provision under Rule 5 clearly stipulates that the goods are exported without payment of Central Excise duty under bond or letter of undertaking. In other words, the term 'export' used in the notification has to be understood as the goods, which are exported without payment of Central Excise duty under bond or letter of undertaking. These expressions have definite connotation and it would only imply that the refund can be availed only in the circumstances where the assessee is primarily an exporter, who exports under bond or letter of undertaking. In this case, admittedly, clearance from one EOU to another EOU cannot be said as export under bond or under letter of undertaking. Therefore, a plain reading of the rules and the notification would imply that only physical exports would be covered under the purview of the exports for grant of refund. We find that similar issue has been dealt by the Coordinate Bench in the case of CCE Vs Arrow Engineers [2018 (2) TMI 279 - CESTAT Mumbai] and there also though the clearances was to SEZ unit by treating this as deemed export, the refund was denied under Rule 5 by not treating the same as actual export i.e., taking the goods out of the country. The relevant paras are reproduced below for ease of reference.
"5. As can be seen from a careful perusal of the provisions, Rule 5 is not, notwithstanding the title, merely a refund enabler. It accords sanctity to availing of Cenvat credit in transactions of goods or services that are, otherwise exempt and, in consequence, not entitled to the privileges of the scheme. This is in recognition of the broad principle of not burdening the export cost with any of the levies that are normally to be borne by a domestic consumer. With the extending of the facility of availment dispute being exempt owing to clearance for export under Bond or vide letter of undertaking the residuary option in Rule 5 can be invoked to the extent of inability to utilise such credit for discharging tax liability on domestic clearance or by clearing goods intended for export (5) E/30097 & 30116/2018 on payment of duty. Impliedly, the option of refund can be availed only in circumstances of the assessee being primarily an exporter under bond or letter of undertaking, with negligible opportunity of domestic clearances; or an exporter of goods that are not liable to terminal excise duty.
6. This reasoning flows from the objective of the scheme of Cenvat credit to restrict levy of duties only to that value which has been added by the manufacturer to goods or by provider of services. In a tariff that is extensive, it is not possible to assign rates that accommodate stages of manufacture; the levy of duty to the extent of contribution to manufacture is facilitated by permitting debit of duty to the extent of liability contribution made in the prior stages. It is, therefore, not a mechanism for refund of duties that have already been loaded onto the goods but for restricting the levy to such as is intended by law. A harmonious construction of Rules 3, 5 and 6 of Cenvat Credit Rules, 2004 would amplify the intent : while, generally, input services/inputs used in manufacture/provision of exempt (including export) goods/services are excluded for consideration for the pool of credit under the Cenvat scheme, the compelling necessity to leach the duty from export goods/services warrants the enablement of such privilege. It may, therefore, be posited that Rule 5 is the exception to Rule 3 and the strict injunction in Rule 6 barring the acknowledgement of exempt goods/services is waived in the circumstances enumerated in sub-rule (5) of Rule 6.
7. Applying this stencil to supplies effected to units in special economic zones, it is apparent from Rule 6(5) that such supplies are not exports per se but are accorded a treatment akin to that of exports in the availing of Cenvat credit. Therefore, the credit of duty/tax on inputs/input services utilized in supplies to special economic zones are no different from the inputs/input services used for manufacture of dutiable goods. For other export related privilege too devolve on these supplies, the appropriate provision should specify coverage. Therefore, duties suffered by goods that are exported are neutralized through the rebate scheme or through Rule 5 of Cenvat Credit Rules, 2004. Supplies to special economic zones are not specified to be so privileged.
8. This is a logical corollary of the deeming of special economic zones as 'outside the customs territory' and, in accordance with which, drawback (at par with exports) is extended to the goods procured from the 'Domestic Tariff Area' by units in special economic zones against foreign exchange. The parity with exports is accorded to supplies effected to Special Economic Zones through the provision of the statute governing such Zones.
9. The decision of the Tribunal in Commissioner of Central Excise, Pune- II v. Quality Screens [2008 (226) E.L.T. 608 (Tri.-Mumbai)] makes it amply clear that only physical exports would entitle the refund under Rule 5 of the Cenvat Credit Rules, 2004. The decision of the Tribunal in Commissioner of Central Excise & Service Tax, Rajkot v. Parth Trading Co. [2016 (338) E.L.T. 616 (Tri.-Ahmd.)] relies upon the circular dated 28th April, 2015. Likewise, the decision in Shri Bajrang Power & Ispat Ltd. v. Commissioner of Central Excise, Raipur [2012 (282) E.L.T. 108 (Tri.-Del.)] also relies upon the circular of the Central Board of Excise and Customs. The circular has been issued to allay the apprehensions of the trade that amendments to Rule 5 of Cenvat Credit Rules, 2004 and Rule 18 of Central Excise Rules, 2002 may alter any privilege of goods cleared to Special Economic Zone to the extent that such goods are in conformity with the definition of 'exports' in the Central Excise Act, 1944 and the rules framed therein. The benefit of Rule 18 of Central Excise Rules, 2002 (6) E/30097 & 30116/2018 and Rule 5 of Cenvat Credit Rules, 2004 are available. However, in the present instance, the impugned order has failed to demonstrate as such."
10. Similarly in the case of Jimtex Pvt Ltd Vs CCE, Thane-I [2015 (8) TMI 1411 - CESTT Mumbai], the Tribunal had examined the provisions under Rule 5 in terms of Notification No.11/2002, where the refund was rejected. They relied on the appendix to Notification No.11/2002, wherein, clause (4) provides that manufacturer is required to submit refund application along with Bill of Lading or Shipping Bill or export proof duly certified by any office of Customs, to the effect that the goods have in fact been exported and accordingly, upheld the rejection of refund claim. Therefore, in our considered view, the expression used in Rule 5 as well as notification connotes to physical export i.e., taking goods out of India and would not cover deemed exports.
11. Insofar as issue (b), which is whether the amendment being prospective or retrospective is concerned; While the appellants are claiming that it is prospective in nature, whereas, the department is submitting that it is essentially clarificatory notification and therefore, it is only to clarify what was otherwise obvious prior to said amendment in terms of Rule 5 read with Notification No.27/2012. Learned Advocate has essentially argued that the amendment does not use the term 'for the removal of doubts it is hereby clarified' and therefore, it cannot be considered that it was clarificatory in nature. He has referred to certain judgments of the Tribunal in support that where there has been a distinction made based on pre and post amendment of the said explanation. In this regard, we find that appellants have also relied on the judgment in the case of Inter Globe Aviation Ltd Vs CC, New Delhi [2024 (23) Centax 81 (Tri-Del)], affirmed by the Hon'ble Supreme Court in the case of CC, Air Cargo Complex (Import) Vs Inter Globe Aviation Ltd [2025 (32) Centax 361 (SC)]. Para 35 of the said order is cited below.
"35. A clarificatory provision generally seeks to supply an obvious omission or to clear doubts on the meaning of the language used in the previous provisions. It makes explicit or clears the meaning of a provision contained in the Act, which meaning was already implicit. The Courts have repeatedly held that in such a situation it is necessary to first consider the meaning of the provision to which Explanation is added without such Explanation, and then compare the same with the meaning given by the added Explanation. If the result is same, then alone the Explanation can be considered to be clarificatory in nature and given a retrospective effect from the inception of the original provision. The (7) E/30097 & 30116/2018 provision sought to added cannot be presumed to be clarificatory merely because the provision attached to Notification bears the nomenclature such as 'it is clarified' or 'for the removal of doubts'. It has to be determined, in each case, whether the provision is clarificatory, basis the test laid down by the Courts."
12. We find that the Hon'ble Supreme Court held that it is necessary to first consider the meaning of the provision to which explanation is added without such explanation and then compare the same with the meaning given by added explanation. If the result is same, then alone the explanation can be considered clarificatory in nature and given retrospective effect from the inception of the original provision. Having regards to this, we find that, in the given factual matrix, as discussed supra, Rule 5 as well as Notification No.27/2012 clearly brings out that deemed exports were not covered and it was only relatable to physical exports i.e., taking the goods out of India. Therefore, in that sense, the amendment is not enlarging or putting somebody at disadvantage and it is only clarifying what was otherwise obvious in the rules and the notification. Thus, we find that there is force in the submission of the Revenue that in this case the amendment has to be treated as having retrospective effect. We beg to differ with the decisions in this regard by Coordinate Benches even though those decisions are not explicitly on this issue and has been made in respect of different issue altogether.
13. Insofar as issue (c) of whether reliance placed by the appellant on Shilpa Copper Wire Industries Ltd (supra), as upheld by Hon'ble Supreme Court is concerned, we have perused the judgment of Hon'ble Gujarat High Court (supra) and we find that the issue involved in that case was whether there is any difference between deemed export and physical export or otherwise. The Revenue has preferred an appeal against the order of the Tribunal before Hon'ble Gujarat High Court where the Tribunal had, inter alia, allowed the refund under Rule 5 by holding that there was no difference between deemed export and physical export. In that case also, clearance was from one EOU to another EOU and admittedly, such clearances were termed as 'deemed export'. Hon'ble Gujarat High Court, after going through catena of judgments and submissions, inter alia, upheld the order passed by the Tribunal and also confirmed the order of the Commissioner (Appeals) holding that clearances made by 100% EOU to another 100% EOU, which are deemed exports, are to be treated as physical exports for the purpose of (8) E/30097 & 30116/2018 entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of CCR, 2004. The Revenue preferred an appeal against the said order before the Hon'ble Supreme Court and Hon'ble Supreme Court dismissed the SLP against the judgment of Hon'ble Gujarat High Court. The Order of the Hon'ble Supreme Court is cited below.
"Delay condoned.
In view of the decision of this Court in the case of Virlon Textile Mills Ltd. v. Commissioner of Central Excise, Mumbai, reported in (2007) 4 SCC 440, the Special Leave Petition is dismissed."
14. However, though the facts in this case are similar to one which is in these appeals, the order of Hon'ble Gujarat High Court, whereby, deemed export was considered as eligible as physical export for the purpose of refund under Rule 5, the ratio of this order may not be applicable in the present matter in view of amendment vide Notification No.06/2015 dt.01.03.2015 inserting explanation 1(1A) restricting the scope of Rules and notification to physical export alone. Since we find this explanation being clarificatory in nature and therefore, it will have retrospective effect. This aspect has not been dealt with or discussed in the judgment of Hon'ble Gujarat High Court in the case of Shilpa Copper Wire Industries Ltd (supra) and hence the ratio of the said judgment will not be applicable.
15. Appeals dismissed.
(Pronounced in the Open Court on 25.02.2026) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) Veda