Junta defectors said Light Infantry Battalion 102 disobeyed orders to advance during fierce fighting with resistance forces in Karen State.
Junta forces have conducted multiple artillery strikes day and night since Monday near the Thai border.
Crime is flourishing in Shwe Kokko New City in Karen State, even as Beijing denies official involvement in the so-called Special Economic Zone.
Resistance groups and regime forces are engaged in a fierce battle near the strategic Ukayit Hta military outpost in southeast Myanmar.
Major Saw Win Myint of the attack on the Ukayit Hta outpost near the Thai border says hundreds of regime troops have been killed.
The battle for Thay Baw Boe camp was another victory for the ethnic Karen fighters who have overrun several army camps in Karen State since last year.