Mylan Laboratories Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
Summary: The CESTAT Chennai allowed four appeals filed by Mylan Laboratories Limited, a 100% Export Oriented Unit engaged in manufacture of pharmaceutical products, and set aside the Orders-in-Appeal confirming Customs and Central Excise duty demands on duty-free raw materials destroyed within the factory after prior intimation to the department.
The appellant had procured raw materials duty-free under Notification No. 52/2003-Cus and Notification No. 22/2003-CE. Certain materials became obsolete or unusable and were destroyed within the unit. The Revenue proceeded on the basis that, before the 2015 amendments, the notifications did not expressly permit destruction without payment of duty and that the Foreign Trade Policy could not override the statutory notifications.
The appellant relied upon Para 6.15 of the Foreign Trade Policy, which permitted destruction of specified goods within the unit after intimation to Customs authorities. It contended that the 2015 amendments were clarificatory and retrospective and that the FTP and exemption notifications had to be read harmoniously. The Revenue contended that exemption had to flow strictly from the statutory notifications and that the amendments were prospective.
The Tribunal held that the EOU scheme is a composite statutory scheme in which the Foreign Trade Policy provides the substantive framework and the Customs and Central Excise notifications provide the mechanism for implementation. It found that the notifications could not be interpreted in isolation from the policy they were intended to operationalize.
