Order Date – 09 June 2023

Parties: Matrix Laboratories Ltd, Mylan Laboratories Ltd Vs Commissioner of Central Tax Medchal - GST

Facts – 

• The Appellant, Matrix Laboratories Ltd, Mylan Laboratories is manufacturer of various pharma products and is registered as 100% EOU. For the raw materials imported by them, they are availing the benefit of Notification No. 52/2003-CUS dt.31.03.2003 and in respect of indigenously procured raw materials, consumables etc., they are availing the exemption provided under Notification No. 22/2003-CE dt.31.03.2003.
• In some cases, they have cleared such imports of the raw materials to their DTA units on which they have paid appropriate duty while clearing the same.
• A Show Cause Notice was issued for the period April, 2005 to September, 2005 involving the extended period and for the normal period October, 2009 to March, 2010 on the ground that when such duty free inputs are cleared from EOU to DTA, the Duty is required to be discharged by way of cash payment, by way of debit in the PLA Account whereas the Appellants have utilized the Cenvat credit which is not legal and proper.

Issue – 

• Whether the appellant is liable to discharge duty on duty free inputs are cleared from EOU to DTA?

Order – 

• The Tribunal observed that as per the decisions in the cases Matrix Laboratories Ltd and Hetero Labs, it has been held that the EOU Assessee is eligible to utilize Cenvat credit when they clear inputs/ raw materials to DTA unit. 
• However, the Hyderabad Tribunal in the case of Divis Laboratories Ltd held that if the raw materials/ inputs cleared pertain to procuring the inputs by getting the benefit of Notification No. 52/2003-CUS, the EOU is required to pay the duty only by way of cash and Cenvat credit cannot be utilized since the inputs were imported by claiming Customs Duty exemption.
• Thus, it was held that the amount involved pertains to Customs Duty foregone, the Appellant is required to pay the duty only by way of cash debit (PLA debit). They are not eligible to utilize Cenvat credit for such clearances. In respect of amount involved pertains to Excise Duty foregone since the Appellant has procured the goods indigenously, the clearances can be made by debiting Cenvat credit account.
• The Appellant is required to pay the duty involved for the normal period. Since the duty was already paid by way of Cenvat credit, there being no revenue loss to the Department, interest and penalties are set aside. Since the Appellant is making good the payment by way of cash, the Appellant would be entitled to get the relief for the Cenvat debits already made by them.
• The Appeals are disposed.