IN FORCE Agenda SEZ / EOU / FTWZ 2018-09-12

Agenda for follow up meeting to be held on 5th Oct, 2018 to discuss the deferred cases of 84th BoA held on 12th Sept, 2018

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No. F.2/4/2018-SEZ Government of India Ministry ofCommerce and Industry Department of Commerce (SEZ Section)

Meeting Notice

_ Udyog Bhawan, New Delhi Dated thez@ Septem ber, 2018

OFFICE MEMORANDUM

Subject: Follow-up meeting of the Board of Approval for Special Economic Zones (SEZs) to discuss the deferred cases of 84" meeting — Reg.

to The Follow-up meeting of the Board ofApproval for Special Economic Zones (SEZs) discuss the deferred cases of 34" meeting under the Chairpersonship of Commerce Secretary, Department of Commerce has been scheduled on 5" October, 2018 at 4.30 P.M in Room No. 141, Udyog Bhawan, New Delhi. You are requested to make it convenient to attend the meeting, ~ \ 2. A copy ofAgenda Items is enclosed herewith for referenc MWx Deputy Secretary to the Goveriment(Senthil Nathanof India §) Tel: 2306 3268 Email: senthil.nathan@gov.in

Development Commissioner, Noida Special Economic Zone, Noida,
Development Commissioner, SEEPZ Special Economic Zone, Mumbai. 3. Development Commissioner, Cochin Special Economie Zone, Cochin. 4. Development Commissioner, Madras Special Economic Zone, Chennai
Development Commissioner, Kandla Special Economic Zone, Gandhidham.
Development Commissioner, Visakhapatnam Special Economic Zone, Visakhapatnam
Development Commissioner, Falta Special Economic Zone, Kolkata,

Copy to: PPS to CS/ PPS to AS (BBS) / PA to DS (SNS).

No. F.2/4/2018-SEZ Government of India Ministry of Commerce and Industry Department of Commerce (SEZ Section)

Meeting Notice

Udyog Bhawan, New Delhi Dated the = October, 2018

{ | | |

OFFICE MEMORANDUM

Subject: Follow-up meeting of the Board ofApproval for Special Economic Zones (SEZs) to discuss the deferred cases of 84" meeting — Reg.

to The Follow-up meeting of the Board of Approval for Special Economic Zones (SEZs) discuss the deferred cases of 84" meeting under the Chairpersonship of Commerce Secretary, Department of Commerce has been scheduled on 5" October, 2018 at 4.30 P.M in Room No. 141, Udyog Bhawan, New Delhi. You are requested to make it convenient to attend the meeting. a A copy of Agenda Items is enclosed herewith for reference. — Under (Aditya Narayan) Secretary to the Government of India Tel: 2306 2496 Email: aditya.n @gov.in

Central Board of Excise and Customs, Member (Customs), Department of Revenue, North Block, New Delhi. (Fax: 23092628).

2, Central Board of Direct Taxes, Member (IT), Department of Revenue, North Block, New Delhi. (Telefax: 23092107).

Joint Secretary, Ministry of Finance, Department of Financial Services, Banking Division, Jeevan Deep Building, New Delhi (Fax: 23344462/23366797).
Joint Secretary, Department of Industrial Policy and Promotion, Udyog Bhawan, New Delhi.
Joint Secretary, Ministry of Shipping, Transport Bhawan, New Delhi. 6. Joint Secretary (E), Ministry of Petroleum and Natural Gas, Shastri Bhawan, New Delhi
Joint Secretary, Ministry of Agriculture, Plant Protection, Krishi Bhawan, New Delhi. 8. Ministry of Science and Technology, Sc ‘G’ & Head (TDT), Technology Bhavan, 9. Mehrauli Road, New Delhi. (Telefax: 26862512) Joint Secretary, Department of Biotechnology, Ministry of Science and Technology, qm Floor, Block 2, CGO Complex, Lodhi Road, New Delhi - 110 003.
Additional Secretary and Development Commissioner (Micro, Small and Medium Enterprises Scale Industry), Room No. 701, Nirman Bhavan, New Delhi (Fax: 23062315).

| | | | | | | | |

Il. Secretary, Department of Electronics & Information Technology, Electronics 12. Niketan, 6, CGO Complex, New Delhi. (Fax: 24363101) Joint Secretary (IS-I), Ministry of Home Affairs, North Block, New Delhi (Fax: 23092569)
13, Joint Secretary (C&W), Ministry of Defence, Fax: 23015444, South Block, New Delhi.
14, Joint Secretary, Ministry of Environment and Forests, Pariyavaran Bhavan, CGO Complex, New Delhi — 110003 (Fax: 24363577)
1. Joint Secretary & Legislative Counsel, Legislative Department, M/o Law & Justice, A-Wing, Shastri Bhavan, New Delhi. (Tel: 23387095),

Joint Secretary, (Justice-I), Department of Legal Affairs, M/o Law & Justice, New Delhi (Tel: 2338 3037).
Secretary, Department of Chemicals & Petrochemicals, Shastri Bhawan, New Delhi 18. Joint Secretary, Ministry of Overseas Indian Affairs, Akbar Bhawan, Chanakyapuri, New Delhi. (Fax: 24674140)
Chief Planner, Department of Urban Affairs, Town Country Planning Organisation, 20. Vikas Bhavan (E-Block), I.P. Estate, New Delhi. (Fax: 23073678/233 79197) Director General, Director General of Foreign Trade, Department of Commerce, Udyog Bhavan, New Delhi.
Director General, Export Promotion Council for EOUS/SEZs, 8G, 8" Floor, Hansalaya Building, 15, Barakhamba Road, New Delhi — 110 001 (Fax: 223329770)

22.Dr. Rupa Chanda, Professor, Indian Institute of Management, Bangalore, Bennerghata Road, Bangalore, Karnataka.

Government of Andhra Pradesh, Principal Secretary and CIP, Industries and Commerce Department, A.P. Secretariat, Hyderabad ~ 500022. (Fax: 040-23452895),

24.Government of Telangana, Special Chief Secretary, Industries and Commerce 25. Department, Telangana Secretariat Khairatabad, Hyderabad, Telangana. Government of Karnataka, Principal Secretary, Commerce and Industry Department, Vikas Saudha, Bangalore — 560001. (Fax: 080-22259870)

Government of Maharashtra, Principal Secretary (Industries), Energy and Labour Department, Mumbai — 400 032.

27, Government of Gujarat, Principal Secretary, Industries and Mines Department Sardar 28, Patel Bhawan, Block No. 5, 3rd Floor, Gandhinagar — 382010 (Fax: 079-23250844), Government of West Bengal, Principal Secretary, (Commerce and Industry), IP Branch (4" Floor), SEZ Section, 4, Abanindranath Tagore Sarani (Camac Street) Kolkata — 700 016
29.Government of Tamil Nadu, Principal Secretary (Industries), Fort St. George, Chennai — 600009 (Fax: 044-25370822),
1. Government of Kerala, Principal Secretary (Industries), Government Secretariat, Trivandrum — 695001 (Fax: 0471-2333017).
31.Government of Haryana, Financial Commissioner and Principal Secretary), Department of Industries, Haryana Civil Secretariat, Chandigarh (Fax: 0172-2740526).
32.Government of Rajasthan, Principal Secretary (Industries), Secretariat Campus, 33. Bhagwan Das Road, Jaipur — 302005 (0141-2227788), Government of Uttar Pradesh, Principal Secretary, (Industries), Lal Bahadur Shastri Bhawan, Lucknow — 226001 (Fax: 0522-2238255),

Government of Punjab, Principal Secretary Department of Industry & Commerce 35. Udyog Bhawan), Sector -17, Chandigarh- 160017. Government of Madhya Pradesh, Chief Secretary, (Commerce and Industry), Vallabh Bhavan, Bhopal (Fax: 0755-2559974 Copy to: PPS to CS/PPS to AS (BBS) /PA to DS (SNS).

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Detailed list of Agenda Items for follow-up meeting of BoA to be held on 5 October, 2018

|3.<br>| 84.8 Gi)<br>Shri BrijeshKumarThakur, Director, Coastal Energy<br>FSEZ<br>SA vo a<br>4,<br>M/s. Flawless Jewels—Appeal|
|---|
|84.8(vy)<br>M/s. PureGold Jewellers&Diamonds (India) Pvt.<br>SEEPZSEZ<br>a|
|8<br>|84.8(vi)__| Mis. Limited Jevellery— Appeal<br>|SEEPZSEZ.|
|13. | 84.13 @)<br>M/s. Sarthak Warehousingand TradingCompany—<br>KASEZ<br>pSfestonoran<br>||

Agenda for follow-up meeting to be held on 5" October, 2018 for 14 deferred cases of the 84"" BoA in its meeting held on 12" September, 2018

Agenda Item No. 84.7(vii) Request of M/s. Anita Exports, a unit in Kandla SEZ for renewal of LoA for extension of recycling of plastic waste and scrap.

M/s, Anita Exports a unit for recycling plastic at KASEZ was granted LoA on 15.05.1996 for recycling plastic waste & scrap and for re-processing of worn and used clothing,

Earlier the proposal for renewal of their LoA was rejected by BoA in its 78" meeting held on 03.07.2017 [Agenda item No. 78.5(ii)]. The unit filed SCA No. 19048 of 2017 before the Hon’ble High Court of Gujarat at Ahmedabad. Now, the Hon’ble Gujarat High Court vide its order dated 08.05.2018 has quashed and set aside the aforesaid BoA decision rejecting the proposal for extension/renewal. While quashing the decision of the BoA, the Hon’ble Gujarat High Court has observed that: -

“Considering the aforesaid facts and circumstances of this case, we are of the view that the Petitioner’s case requires re-consideration by the authority particularly to examine the similarity with other existing units which according to the petitioners were granted renewal despite being non operationalfor extendedperiod.

With these observations, this writ petition is hereby partly allowed. The order passed by the respondent no. 2 rejecting the proposalfor extension/renewal (as recorded at Item No. 78.5(ii) of the minutes of meeting held on 03.07.2017) and the covering letter dated 14.07.2017 is hereby quashed and set-aside.”

The observation of the Hon’ble High Court in aforesaid Judgement is based on the claim of M/s. Anita Exports in their SCA before High Court that similar cases of non operational units for extended period were allowed approval for revival and renewal of their LoAs by the BoA in the case of two similar units as claimed by the unit in their petition, one of M/s. R. R. Vibrant Polymers Ltd., KASEZ (68" BoA meeting held on 30.12.2015) and another of M/s. Plastic Processors & Exporters Pvt. Ltd., Noida SEZ (69" BoA meeting held on 23.02.2016) which was otherwise also lying defunct and dormant and further directed to re-consider the case of the petitioner by the authority particularly to examine the similarity with other existing units which according to the petitoners were granted renewal despite being non operational for extended period.

Accordingly, the unit vide their letter dated 16.05.2018 represented their case for re-
consideration in the wake of the aforesaid Court order and has further undertaken that: >» They agree to the policy guidelines dated 17.09.2013 and its amendment dated 13.02.2018 will be acceptable to them.
- » They have placed the order for new machinery for resuming the operations and submitted copy of quotation and the purchase order.
- » They will employ about 200 persons in this project.

» They will achieve positive NFEE and shall do the physical export as per the Policy of Ministry.
: » They have invested Rs. 210 lakhs in Plant & Machinery and Building. They also submitted Affidavit for compliance of Policy guidelines dated 17.09.2013 and
amendment made vide Ministry’s letter dated 13.02.2018 regarding physical export conditions.

As per the Hon’ble High Court observations, similarity of the cases of other units on the basis of Agenda and minutes of their case are tabulated below: -

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|||||||||||
|---|---|---|---|---|---|---|---|---|---|
|Sr. No.|| Details of the proposal|||M/s.|R.|R.|Vibrant|M/s,|Plastic|M/s. Anita Exports|
|Polymers|Ltd.|_|||Processors &|
|Exporters|Pvt.|Ltd.|
|L|BoA Agenda|items|68"|BoA|69"|BoA|78"|BoA|03.07.2017|
|decided in|its|meeting|30.12.2015 — Item|23.02.2016 — Item|— Item No.|78.5|(ii)|
|held on|No.|68.5|(vi)|No.|69.11|(v)|
|3.|No.|of years|non-|15|years|8|years|7|years|
|operation|
|5.|Reasons of|non-activity|| Fire broke out in|Global|recessionin|||Due|to short|
|claimed by unit|their factory|in|the|2008|their orders|extension|of their|
|year 2000 and the|were suspended|and|||LoA in piecemeal|
|insurance company|||unit|in|loss from|basis,|they could|not|
|rejected|their claim|||2009-2011.|place|their export|
|and Bank|issued|Due|to|short|orders.|
|notice|to|them|for|extension|of their|
|recovery,|huge EM|||LoA|in piecemeal|
|rental|dues|was|basis,|they|could|not|
|pending.|place|their export|
|orders.|
|6.|Revised|revival|plan|After settlement of|| They undertakes|They|undertakes|to|
|their case with Bank ||abide|by provisions|||abide by provisions|
|and|Insurance, they|||of Policy dated|of Policy dated|
|came|out with re-|17.09.2013|and plan|||17.09.2013|and|
|organisation|of their|||to|have|10|ordered new|
|unit spent Rs,|300|Agglomerator plants|| machinery for|
|lakhs|in plant &|with 2|generator sets|| resuming|operation|
|machinery.|They|of 250 KW|each|and invested Rs,|210|
|undertakes|abide by|||with 200|lakhs|in plant &|
|provisions|of Policy|| employment and|machinery and|
|dated|17.09.2013|NFE of|Rs.|7362.80|||building with 200|
|and paid|rental|dues|||lakhs|in 5|years.|employment.|
|of|Rs.|69.50|lakhs|
|ie|NFE prior to|non-|Positive|Negative|Positive|
|activity|
|Whether|agreeable|to|Yes|Yes|Yes|
|the|conditions|of|Policy|
|guidelines|dated|
|17.09.2013|as|amended|
|including|physical|
|export|condition|
|Premises|They were|evicted|

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----- Start of picture text ----- after renewal they at a different were re-stored with locations possession incidence machinery proposed | are available and to be brought additional new machinery are already ordered SEZ scheme the time of SEZ scheme defunct year December - 2017 GPCB available at the plot allotted in the name of Anita Exports recommended by DC ----- End of picture text -----

The proposal was considered in the 83“ meeting of the Board of Approval held on 19.06.2018 and the Board, after deliberations, deferred the proposal with the direction to DC, KASEZ to carry out inspection of the Unit and furnish a factual report after checking the records of the Unit and similar cases pointed out by the Hon’ble High Court of Gujarat in its order dated 08.05.2018.

The DC, KASEZ along with the JDC and other officials of KASEZ visited the unit on 22.06.2018. During inspection of the unit, some old machinery for recycling of plastic waste and scrap such as Agglomerate Machine, Generator in covered conditions etc. were found in their allotted plot No. 419-B which are lying idle due to non-operation of the plastic business and nonrenewal of their LoA.

The DC has informed that the said unit has already ordered additional new machinery like Agglomerate Machine, Blade Sharping machine, Steel Trays for collection, Extra electric motor (Heavy Duty), Electric cable, Diesel Generator set (250K VA) at a cost of Rs. 66.80 lakhs for recycling of plastic waste and scrap from M/s. Brahmani Engineering Works, Shed No. K-42, Opp. ITI, GIDC, Gandhidham (Kutch). Also, they have submitted that they have invested Rs. 210 lakhs totally in Plant, Machinery & Building. As regards the consent order from GPCB, the unit will be required to obtain fresh consent order once and if their LoA is renewed by the BoA.

Accordingly, the request of M/s. Anita Exports is placed before the BoA for its reconsideration.

The request is placed before BoA for its consideration.

Item no. 84.8 : Appeals before BoA

Item No. 84.8(i) Appeal dated 18.05.2018 of M/s. Coastal Energy Limited a unit in FSEZ against order dated 13.04.2018 passed by UAC, FSEZ for imposition of penalty of Rs. 45.21 lakhs (1% of the non-achieved positive NFE to the tune of Rs. 45.21 crores) U/S 13 of the Foreign Trade Development & Regulation Act, 1992 and Section 11 of the said Act.

Item No. 84. 8 (ii) | Appeal dated 28.06.2018 of Shri Brijesh Kumar Thakur, Director, Coastal Energy Ltd. with the prayer for extension/revalidation of the LoA cancelled by the UAC vide their order dated 02.03.2012.

Gist of order appealed against

of M/s. Coastal Energy Limited was granted LOP on 24.3.2006 for manufacture and export Bio Diesel (main) & Glycerin (by product) and subsequently two more item were included viz. “Soaps & soap Noodles”.

The UAC vide its order dated 02.03.2012 cancelled the LoA under section 16 of the SEZ Act, 2005 on the grounds of non-performance and failure to achieve positive NFE which is in violation of provisions of LoA, LUT read with Rule 53 of SEZ Rules, 2006,

The Monitoring of Annual Performance Report of the unit for the period FY 2008-09 to 2010-11 was placed in the 67" UAC meeting held on 21.01.2015 and the Committee noted that the firm/unit i.e. M/s. Coastal Energy Limited had failed to achieve positive NFE to the tune of Rs. 45.21 crores.

should A Notice dated 23.02.2015 was issued to the unit to Show Cause as to why penalty and not be imposed for violation of Foreign Trade Policy, Handbook of Procedures, the LoP the LUT under Section 11 of Foreign Trade (Development & Regulation) Act, 1992, read with FT (D&R) amendment Act, 2010 Rule 10 of Foreign Trade (Regulation) Rules, 1993 and for violation of provisions in terms of Section 16 of currently enacted SEZ Act, 2005 & SEZ Rules, 2006 by occupying space in SEZ without any exports. Moreover, they are also directed to show cause as to why an order will not be issued under Rule 9 of the Foreign Trade (Regulation) Rules 1993,

Two personal hearings were given to the unit by the then DC on 11.02.2016 and 01.03.2016. A reply to the show cause was submitted by the unit on 18.11.2016. Another Show Cause Notice was issued to the unit on 16.08.2017. found On examination of records, the UAC in its 97th meeting held on 17th January, 2018 that the unit has violated the condition of LoP by failing to achieve positive NFE to the tune of Rs. 45.21 crores cumulatively against Falta SEZ unit, thereby causing pecuniary loss of Government Revenue.

In exercise of the powers vested under Section 13 of the Foreign Trade (Development Regulation) Act, 1992 and Section 11 of the said Act, a penalty of 1% to the tune of Rs. 45.21 lakhs was imposed on M/s, Costal Energy Limited by the UAC vide order dated 13.04.2018.

Contents of Appeals

The Appellant has stated as under:-

That after cancellation of LoA under section 16 of SEZ Act, 2005 the unit was outside the purview of SEZ Act, 2005 and there was no scope to issue any show cause notice under the SEZ Act.
No reference of second show cause notice dated 16.08.2017 has been taken into consideration which is still pending for disposal.
The order is inconclusive, arbitrary and suffers from legal infirmity. The same is nonspeaking, whimsical without any basis of legal requirement.
All the actions under the notices are beyond the time limit as prescribed under the law of limitation of state and therefore barred by limitation.
The adjudicating authority was himself convinced that under the given. situation continuance of the unit was not possible for technical and marketable condition in the international trade and thus he had unilaterally and arbitrarily, before completion of 1" block of 5 years, had cancelled the LoA and the appellant had not litigated that order of cancellation. Instead had taken due permission and disposed off the stock of inputs in DTA market on payment of proper duty. Under such situation his order has been passed in desultory and cavalier fashion without considering merits of the case and the submission of the appellant.
Merely enabling a party to make a representation in writing and thereafter without affording opportunity of attending hearing the order has been passed.
The notice has been issued by the person and the order has been passed by the same person. Thus bias and arbitrariness are very much existent in the present case. It is settled law prosecutor cannot be the judge. Entire proceeding starting from cancellation of LoA and issuance of notice and thereafter passing of order-in-original are perverse and illegal.
The penalty was harsh considering the circumstances of the case and the genuine difficulties faced by the unit/management of the unit.

9, There was no lack of due diligence on their part not any intention to avoid payment. In fact, despite financial difficulties they had paid a hefty amount of rental dues amounting to Rs.86,79,425/- in two instalments. The NFE proceedings against them has been adjudicated and final order has been passed demanding penalty of Rs.45.21 lakhs which was paid by them.

Rule Position

(Section 11 of The Foreign Trade (Development And Regulation) ACT, 1992 No. 22 OF 1992)

Contravention of provisions of this Act, rules, orders and export and import

policy.

(1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made thereunder and the export and import policy for the time being in force. (2) Where any person makes or abets or attempts to make any export or import in contravention of any provision of this Act or any rules or orders made thereunder or the export and import policy, he shall be liable to a penalty not exceeding one thousand rupees or five times the value of the goods in respect of which any contravention is made or attempted to be made, whichever is more.

(3) Where any person, on a notice to him by the Adjudicating Authority, admits any contravention, the Adjudicating Authority may, in such class or classes of cases and in such manner as may be prescribed, determine, by way of settlement, an amount to be paid by that person. (4) A penalty imposed under this Act may, if it is not paid, be recovered as an arrear of land revenue and the Importer-exporter Code Number of the person concerned, may, on failure to pay the penalty by him, be suspended by the Adjudicating Authority till the penalty is paid. (5) Where any contravention of an provision of this Act or any rules or orders made thereunder or the export and import policy has been, is being or is attempted to be made, the goods together with any package, covering or receptacle and any conveyances shall, subject to such requirements and conditions as may be prescribed, be liable to confiscation by the Adjudicating Authority.

(6) The goods or the conveyance confiscated under sub-section (5) may be released by the Adjudicating Authority, in such manner and subject to such conditions as may be prescribed, on payment by the person concerned of the redemption charges equivalent to the market value of the goods or conveyance, as the case may be.

(Section 13 of The Foreign Trade (Development And Regulation) ACT, 1992 No. 22 OF 1992),

Adjudicating Authority

Any penalty may be imposed or any confiscation may be adjudged under this Act by the Director General or, subject to such limits as may be specified, by such other officer as the Central Government may by notification in the Official Gazette, authorise in this behalf.

Section 16 of SEZ Act, 2005. Cancellation of letter of approval to entrepreneur :

Section 16(1) of the SEZ Act, 2005 provides that the Approval Committee may, at any time, if it has any reason or cause to believe that the entrepreneur has persistently contravened any of the terms and conditions or its obligations subject to which the letter of approval was granted to the entrepreneur, cancel the letter of Approval:

Provided that no such letter of Approval shall be cancelled unless the entrepreneur has been afforded a reasonable opportunity of being heard.

The appeals are placed before the BoA for consideration (Annexure-1 & 2).

Item No, 84.8 (iii) Appeal of M/s. Flawless Jewels requesting to set aside impugned orders dated 01.05.2018 and 21.05.2018 passed by SEEPZ SEZ for cancellation of LoA for Gala No. 102 & 104, SDF-VIII, SEEPZ SEZ. Item No. 84.8 (iv) Appeal of M/s. Malhar Jewels requesting to set aside impugned orders dated 01.05.2018 and 21.05.2018 passed by SEEPZ SEZ for cancellation of LoA for Gala No. 301, SDF-VII, SEEPZ SEZ.

Item No. 84.8(v) Appeal of M/s. Pure Gold Jewellers & Diamonds (India) Pvt. Ltd. requesting to set aside impugned orders dated 01.05.2018 and 21.05.2018 passed by SEEPZ, SEZ for cancellation of LoA for Gala No. 401, 402, 403 & 404, SDF-VIII, SEEPZ SEZ.

Item No. 84.8 (vi) Appeal of M/s. Vijay Exports requesting to set aside impugned orders dated 01.05.2018 and 21.05.2018 passed by SEEPZ SEZ for cancellation of LoA for Gala No. 202 & 204, SDF-VII, SEEPZ SEZ.

Item No. 84. 8 (vii) Appeal of M/s. Limited Jewellery requesting to set aside impugned order dated 01.05.2018 and minutes of UAC meeting dated 02.05.2018 regarding decision for cancellation of LoA for Gala No. 02, SDF-VIII, SEEPZ SEZ.

Gist of order appealed against

The Empowered Committee under ASIDE Scheme, Ministry of Commerce & Industry on 01.02.2011 had approved the project of construction of a new Standard Design Factory (SDF) — VIII Tower with RCC (Reinforced Cement Concrete) construction in SEEPZ SEZ with the total approved cost of Rs.23.40 crores with the Government of India contribution of Rs.19.89 crores under ASIDE Scheme. The SEEPZ SEZ had informed MIDC that the building was for locating manufacturing units other than IT units. The MIDC conveyed that as per the original request of the SEEPZ SEZ, Gems & Jewellery units were not proposed in the tower and the construction of the tower was only for Electronic Hardware (EH) units.

The design of the building was changed from RCC structure to a pre-fabricated composite steel structure (pre-engineering building) at a cost of Rs.51.45 crore. SEEPZ SEZ vide their advertisement dated 09.05.2017 invited applications for setting up of units in SDF-VIII in

the new tower for G&J/Electronic Hardware units, without getting the Building Completion Certificate (BCC) and the Occupancy Certificate (OC) of the building.

In June 2017, a Committee of officers from SEEPZ SEZ was constituted for scrutinizing the applications for allotment of space, which found that out of 31 applications received, 28 applications were eligible which included 27 from G&J sector and only 1 from EH sector. The Committee recommended that before provisional allotment in respect of the new units in SDFVIII were made, the aspect of obtaining BCC, OC and Fire NoC may be looked into. Thereafter, then DC SEEPZ SEZ on 04.07.2017 approved the allotment and provisional allotments were made to 27 Gems and Jewellery & 1 Electronic Hardware unit subject to approval from UAC with the condition that possession will be given only on receipt of BCC/Fire NoC/OC from MIDC.

The proposals were placed in the 115" UAC meeting held on 11.07.2017 and the Committee approved and granted LoA to all the 28 units. In the meantime the new DC joined and in the next UAC meeting held on 18.08.2017 at the time of confirming the minutes of previous UAC meting dated 11.07.2017 and submitted a detailed report on 29.11.2017 wherein it was suggested that LoA should be given based on some standard norms, minimum limit for investment, employment, quantum of exports for the company etc.

MIDC informed that giving possession of the units in that stage of the building for setting up of G&J units was not advisable as it would lead to complication and safety issues of the building as well as to the employees in the units. MIDC also recommended cancellation of provisional allotment issued to the G&J units. DoC had been receiving complaints/public grievances against the decision of DC, SEEPZ not allowing possession of the units. The DC, SEEPZ, SEZ recommended cancellation of the allotment of units.

The Competent Authority in DoC approved cancellation of provisional allotments and initiation of disciplinary proceedings against the officer responsible. The SEEPZ SEZ was informed of the decision of cancellation of allotments and subsequently the provisional allotments were cancelled by SEEPZ SEZ on 01.05.2018. Further, in the 124" UAC meeting held on 02.05.2018, the Committee recommended for the cancellation and formal orders were issued on 21.05.2018.

The issue is also the subject matter of a vigilance enquiry being conducted by the Vigilance Division of DoC.

Contents of Appeal

The Appellants have stated as under:-

That the cancellation of LoA of the provisional allotment without any cogent reason has nothing to show as to how the UAC can review its own decision with the change of its Chairperson without any provision in the SEZ Act/Rules and it is apparent that the subsequent

UAC has acted on some pressure/coercion/undue influence with a malafide intent. The cancellation order is silent and not explanatory.

That the proposals were rejected without providing an opportunity for hearing. It has been claimed that the action taken by the subsequent UAC on 02.05.2018 is highly time barred. The appellants have challenged the authenticity of the feasibility report issued by Dr. K. D. Desai stating that the present newly constructed Tower would not be feasible to allot the units to gems and jewellery sector on the basis of which the DC recommended cancellation.

That in the year 2002-2003 and 2003-2004, a building namely SEEPZ ++ Tower I & II originally constructed to locate IT units was put to use for locating Gems & Jewellery manufacturing units as there were no takers from the IT units without any structural change.

Rule Position

Section 15 of SEZ Act, 2005. Setting up of Unit:

Section 15(3) of SEZ Act, 2005 provides that the Approval Committee may, either approve the proposal without modification, or approve the proposal with modifications subject to such terms and conditions as it may deem fit to impose, or reject the proposal in accordance with the provisions of sub-section (8):

Provided that in case of modification or rejection of a proposal, the Approval Committee shall afford a reasonable opportunity of being heard to the person concerned and after recording the reasons, either modify or reject the proposal.

Section 16 of SEZ Act, 2005. Cancellation of letter of approval to entrepreneur :

time, ifSectionit has any16(1)reason of theor SEZcause Act,to believe2005 providesthat the thatentrepreneurthe Approvalhas persistentlyCommittee contravenedmay, at any any of the terms and conditions or its obligations subject to which the letter of approval was granted to the entrepreneur, cancel the letter of Approval:

Provided that no such letter of Approval shall be cancelled unless the entrepreneur has been afforded a reasonable opportunity of being heard.

The appeals are placed before the BoA for consideration (Annexure-3-7).

Item No. 84.8 (xi) Appeal dated 22.06.2018 of M/s. Guruji International a unit in KASEZ against the decision of the 129" UAC meeting dated 17.05.2018 for rejection of proposal for setting up of a unit for manufacturing of plastic pre-processed crushing/granules from Pet Bottles wastes.

Gist of order appealed against

The proposal of M/s. Guruji International for setting up of unit for manufacturing of plastic pre-processed crushing/granules from Pet Bottles wastes was placed before the UAC in its 129" meeting held on 17.05..2018. The proposal was rejected after due deliberation by the UAC on the ground that plastic bottles waste are presently prohibited items for import under ITC (HS) and the proposal involved primarily reprocessing of imported plastic waste and scrap which in terms of Rule 18(4)(a) of SEZ Rules, 2006, cannot be considered.

Contents of Appeal

The unit proposes for import for the purpose of export. The propose unit for import plastic bottles from Asia, Australia and Vietnam and after cleaning/segregation and crushing in machine after making granules, the same will be exported. The unit proposes to make 100% export and no DTA sales.

Rule Position

Rule 18 of SEZ Rules, 2006: consideration of proposals for setting up of unit in a Special Economic Zone:

Rule 18(4)(a) of SEZ Rules, 2006 provides that no proposal shall be considered for recycling of plastic scrap or waste:

Provided that extension of Letter of Approval for an existing Unit shall be decided by the

Board;

The appeal is placed before the BoA for consideration (Annexure-8).

Item No. 84. 8 (xii) Appeal dated 16.07.2018 of M/s. MRA Fragrances Private Limited a unit in NSEZ against the order dated 14.06.2018 of the UAC for rejection of proposal for setting up of new unit to undertaking manufacturing and export of (i) Filter Tobacco (ii) Hooka Tobacco paste (jurak) (iii) Flavoured Hooka Tobacco (Mossel) (iv) Readymade Khaini (v) Zafrani Zarda (vi) Spit Tobacco (vii) Mouth Freshener (viii) Essential & Carrier Oils (ix) India Attar & Fragrances and (x) Various kinds of Areca Nut under HS Code 2403.

Gist of order appealed against

The proposal of M/s. MRA Fragrances Private Limited for setting up of new unit to undertaking manufacturing and export of (i) Filter Tobacco (ii) Hooka Tobacco paste (jurak) (iii)

Flavoured Hooka Tobacco (Mossel) (iv) Readymade Khaini (v) Zafrani Zarda (vi) Spit Tobacco (vii) Mouth Freshener (viii) Essential & Carrier Oils (ix) India Attar & Fragrances and (x) Various kinds of Areca Nut under HS Code 2403 with the projected exports of Rs. 13500 lakhs and NFE earnings worth Rs. 13500 lakhs over a period of five years was placed before the Approval Committee in its meeting held on 06.06.2018.

The Approval Committee, after due deliberations, rejected the proposal in terms of section 15(3) of the SEZ Act, 2005 & Rule 18 of SEZ Rules, 2006 on the following grounds:

(i) The address of the firm’s office and registered office at Chandni Chowk was found to be a residential address which amounts to gross mis-representation of the facts and providing misleading information for taking approval of this unit in NSEZ.
(ii) | Applicant company has been incorporated only in December 2017 and it has not done any manufacture & export of proposed items.
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(iii) | Negative verification report was provided by DC(Customs). Operations of the ~ promoters of the company do not match with ground realities.
(iv) For financial viability the applicant were banking on the operations of M/s Knock Out Fragrances Pvt. Ltd. Applicant had shown profit on Rs.5758/- only for the year 2016-17 and is projecting to achieve an export of Rs.13500 lakhs in next five years in this firm. Clearly this is absolutely unjustified.
(v) Lack of experience in the relevant field to achieve Rs.135 crores export turnover in five years.
(vi) The unit is seeking approval of manufacturing of dissimilar products which is in contravention of Instruction No. 69 of DoC.

Contents of Appeal

The Appellant has stated that the Approval Committee did not provide reasonable opportunity of being heard and the rejection order is almost ex-parte. The grounds of rejection are vague contradictory to the facts/contents and did not support the concept of natural just and equity, The impugned order is against the Government Policy on SEZ for promoting exports.

Rule Position

Section 15 of SEZ Act, 2005. Setting up of Unit :

As per DoC’s Instruction No. 69, the broad banding and splitting of license for setting up of sub-units shall not be allowed.

The appeal is placed before the BoA for consideration (Annexure-9).

Item No. 84, 8 (xiii) Appeal dated 03.08.2018 of M/s. TRIL Infopark Ltd. against the decision of the DC, MEPZ order dated 28.06.2018 for rejection of request for allowing advertisement activities in Ramanujan IT City Campus.

Gist of order appealed against

M/s TRIL Infopark Ltd., Developer was granted LOA dated 20.08.2008 for setting up a sector specific SEZ for IT/ITES sector over an area of 10.115 Ha at Chennai, Tamil Nadu. The zone is operational and has been bifurcated into processing area admeasuring 23.74 acres and non-processing area admeasuring 1.53 acres. The processing area development has been completed comprising of 6 IT buildings admeasuring 4.5 million sq.feet and about 35 units are operational in the processing zone. The investment made in the zone is around Rs.4000 crores and around 40,000 persons are employed in various capacities. ~

about The appellant stated that apart from the 40,000 regular employees of the units in the zone, 5000 persons too visit the zone monthly. The appellant further submits that almost all the employees as well as the visitors to the zone are persons with high spending capacity and in this regard, the appellant has received a proposal from an Advertising Agency that the public spaces in the zone can be used for display of banners and bill boards also that rent can be charged from the advertisers. Without hampering activities of the units while generating revenue to the appellant and also to the Government in the form of GST. Contents of Appeal

The DC without placing the request of the appellant in the meeting of the UAC, unilaterally vide letter dated 28.06.2018 rejected the request of the appellant for permission on the grounds that there is no provision to entertain the request of the appellant in the extant Act or the Rules made thereunder. The appellant prefers this appeal to the BoA as per the powers grant to BoA vide Section 9(2)(g) read with section 9(2)(b) of SEZ Act, 2005. The shopping notificationarcade/retail space are includedin the list of authorized operations for IT/ITES as per DoC’s the provisiondatedof the27.10.2006.SEZ Act andThethe display Rules of made billthere boardsunderand and bannersin thisdoesconnection. not transgress any of

Rule Position

Section 9 of SEZ Act, 2005. Duties, powers and functions of Board:

(b) granting approval of authorised operations to be carried out in the Special Economic Zones by the Developer;

(g) disposing of appeals preferred under sub-section (4) of section 15;

The appeal is placed before the BoA for consideration (Annexure-10).

Item No. 84. 8 (xiv) Appeal dated 02.08.2018 of M/s. Rain CII Carbon (Vizag) Ltd. against the decision of the UAC order dated 23.07.2018 for rejection of request for amendment of LoA to include manufacture of additional products under broad—banding.

Gist of order appealed against

M/s Rain CII (Carbon (Vizag) Ltd. was granted LOP dated 14.09.2017 for setting up a unit in M/s. APIIC SEZ at Achuthupuram, and Rambili Mandal, Visakhapatnam District for manufacture of Calcined Petroleum Coke & By-product Electric power. The unit submitted an application for inclusion of manufacture of additional products (Petro Pitch etc), under broad banding/diversification which was deliberated by 60" UAC meeting held on 29.06.2018. The proposal was rejected on the following grounds:-

(i) There is no common production facility or any backward or forward linkages between the existing and proposed activity.
(ii) | The unit’s refusal to abide by the NFE condition proposed to be imposed by the UAC for the new project under section 15(3) of SEZ Act, 2005
(iii) As the new project is to come for commercial production only after 18 months, UAC could not include the proposed new activity in the LoA as the UAC has no power, abinitio, to permit units to set up beyond one year as per Rule 19(4) of SEZ Rules, 2006.

Contents of Appeal

(i) The two products ic. CPC and petro pitch are the main ingredients for manufacture of Anodes which are used in Aluminium Smelting Process. The products proposed by the unit are in line with the company policy for manufacture in the same line of activity i.e. Petroleum related refining products process only. There is a larger synergy for clubbing of these two line of activities as per their manufacturing policy.
(ii) The unit has not refused for any conditions of NFE provided the same is considered under the same LoA. The unit has projected combined NFE chart wherein they have given clear projection of positive NFE meeting the requirement of SEZ Rules.
(iii) The construction activity on existing LoA plant has been slowed down to synergize with the new proposed plant. The time to be taken for completion of construction of plant and building an installation of machines will take 16 months from the date of LoA amendment. The combined investment proposed is approximately is Rs. 636.87 crores. No such huge invested proposals can be completed within an year or two inspite of their best effort.

Rule Position

Rule 19 of SEZ Rules, 2006: Letter of Approval to a unit.

Unit Rules 19(4) The Letter of Approval shall be valid for one year within which period the and shall commence production or service or trading or Free Trade and Warehousing activity the Unit shall intimate date of commencement of production or activity to Development Commissioner: Provided that upon a request by the entrepreneur, further extension may be granted by the Development Commissioner for valid reasons to be recorded in writing for a further period not exceeding two years:

Provided further that the Development Commissioner may grant further extension of one year subject to the condition that two-thirds of activities including construction, relating to the setting up of the Unit is complete and a chartered engineer’s certificate to this effect is submitted by the entrepreneur.

Provided also that the Board of Approval may, upon a request in writing by the entrepreneur, and after being satisfied that it is necessary and expedient so to do grant further extension for a further period not exceeding one year, at a time.

Rules 22 of SEZ Rules, 2006 : Terms and conditions for availing exemptions, drawbacks and concessions to every developer and entrepreneur for authorized operations.

Rule 22(2) - Every Unit and Developer shall maintain proper accounts, financial year wise, and such accounts which should clearly indicate in value terms the goods imported or procured from Domestic Tariff Area, consumption or utilization of goods, production of goods, including byproducts, waste or scrap or remnants, disposal of goods manufactured or produced, by way of exports, sales or supplies in the domestic tariff area or transfer to Special Economic Zone or Export Oriented Unit or Electronic Hardware Technology Park or Software Technology Park Units or Bio-technology Park Unit, as the case may be, and balance in stock:

Provided that unit and developers shall maintain such records for a period of seven years from the end of relevant financial year: —

Provided further that the unit engaged in both trading and manufacturing activities shall maintain separate records for trading and manufacturing activities.

The appeal is placed before the BoA for consideration (Annexure-11).

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Item No. 84.13 Miscellaneous cases (one proposal)

Item No. 84.13 (i) Restoration of LoA of M/s. Sarthak Warehousing & Trading Co. (SWTC), Gandhidham

M/s. Sarthak Warehousing & Trading Co (SWTC) was granted LoA on 25.06.2010 for trading & warehousing under Rule 18(5) with the specific condition that they shall not be permitted to import any second hand materials such as used clothes or plastic scrap. The 72 UAC in its meeting held on 04.09.2014 noted that there was no restriction in SEZ Act & Rules for keeping second hand goods in warehousing units since such storage would not amount to manufacturing activity which is prohibited under Rule 18(4) (c) and the said goods would also be exported on 100% basis. Therefore, the UAC decided that such relaxation (of permitting storage of second hand goods) shall be subject to the condition that no DTA sale will be allowed under any circumstances by such units and 100% of their imported second hand goods will be exported out of the country.

Based on the aforesaid decision of the UAC, M/s. SWTC applied for modification of their LoA regarding restriction on import of second hand goods such as used clothes & plastic scrap. In the 73rd UAC meeting held on 21.10.2014, after discussion of definition of export u/s 2(m) of the SEZ Act and also taking note of various approvals given by BoA including to M/s. Varsha Export, the UAC decided to replace the word “100% export out of the country” with *100% export” thereby enabling IUT for achieving the export condition. However, the condition of no DTA sale remained.

LoA issued to M/s. STWC was modified on 25.06.2010 to permit import/warehousing of second hand goods with 100% export and no DTA sale condition. M/s. SWTC requested for permission to undertake manufacturing process for the leftover non-exportable used and worn clothing into wipers on behalf of their overseas client under Rule 18(6). The 77th UACin its meeting held on 26.02.2015 rejected the request while allowing cutting of clothes into small pieces as part of warehousing activity by relying on Instruction 49 dated 12.03.2010 of DoC, wherein it was clarified that the concerned UAC can consider on a case to case basis on merits, a proposal of FTWZ unit as part of their authorized operations allowing cutting, polishing, blending, etc.

In the 78th UAC meeting dated 17.03.2015, it was decided not to ratify the aforesaid decision of the previous UAC and to forward the said proposal to BoA. The BoA rejected the proposal on 19.05.2015 in the 65th meeting on the ground that the said activity was not permitted under Rule 18(4)(c). The DoC clarified that 100% export of second hand, worn and used clothing as mentioned in the case of M/s. Varsha Export construes to be physical export out of the country only. Based on the aforesaid clarification, the LoA issued to Ms/. SWTC was modified to reflect that the import and warehousing of second hand goods shall be subject to the condition of 100% physical export out of the country and no intra-zone supplies as well as DTA sales would be permitted. Based on inputs from the DC, DoC directed that the approval given to M/s. SWTC for import of second hand goods should be withdrawn immediately in terms of Rule 18(4) (d) of the SEZ Rules, 2006.

The proposal for restoration was also considered in the 82"¢ meeting of the BoA held on 04.04.2018, however, the same was deferred by the Board after deliberations and DC, KASEZ was directed to re-examine whether activity proposed by the unit amounts to recycling. system DC, KASEZ has now informed that in order to plug the loopholes in the monitoring into of DTA sale, the examination of sensitive items like reprocessed worn and used clothing DTA is done in a separate demarcated examination are under closed circuit camera supervision. They ensure that the examination of bales is on a completely random basis without any scope for discretion by the Appraiser/examining officer. No case of any violation has been noticed by their office, however, a few cases of improperly mutilated worn clothing were - detected and were heavily penalized for the offence.

Recommendation of DC:

It is recommended that in order to verify the compliance of import and their 100% reexport of the imported quantity and prevent any intra-zone sales by M/s SWTC they may submit their monthly stock statement of import and export for the purpose of monitoring the compliance of 100% physical re-export, which can be verified by SEZ authorities. In addition they should install cameras on gate to record all movement with recording for 12 months to be made available to office of DC. If these safeguards are taken, MoC may consider issuing permission to M/s SWTC for import /export of worn clothes.

The request of the unit is submitted for consideration of BoA,

Item No. 84.14 Appeals before BoA

Item No. 84.14 (i) Appeal dated 22.08.2018 of M/s. Accenture Solutions Private Ltd. against the decision of the UAC order dated 06.08.2018 for rejection of proposal of cafeteria measuring 9500 square feet of the application dated 26.06.2018 out of approved additional area of 79, 241 sq. ft.

Gist of order appealed against

M/s Accenture Solutions Pvt. Ltd., a unit under the jurisdiction of SEEPZ SEZ was granted LOP dated 16.12.2014 for the authorized operation “Software Development and IT Enable Services”. The unit started the commercial production w.e.f. 09" April, 2015.

The appellant submitted an application dated 26.06.2018 for the addition of location admeasuring an area of 79,241 sq.ft. at Building A of Manjri Stud Farm Private Ltd. -SEZ and revised projection of the exports, Foreign Exchange Inflow & Outflow.

Pvt. LtdTheSEZ proposaldated 26.07.2018of the appellantheld at wasSEEPZconsideredMumbai.in the UAC meeting of Manjri Stud Farm

The UAC approved the revised projection and additional space of 79,241 sq.ft. excluding cafeteria area of 9500 sq. ft. (within in the additional approved area). The proposal for cafeteria was rejected by the UAC as not related to the authorized operation of the unit.

Contents of Appeal

The UAC erred in treating the proposal not related to the authorized operation due to the following reasons :

a) Appellant being an IT/ITES company operates 247 and cafeteria is one of the prerequisite infrastructure required to run 247 other than few more services like transportation etc.
b) Approximately 5000 workforces will be deployed in this facilities, which also includes women workforce in good numbers and considering 24*7 operation, it is necessary to provide an in-house cafeteria facility for the exclusive use of the units.

That under section 46 of the Factory Act, the State Government may require that in any specified factory wherein more than 250 workers are employed, a canteen or canteens shall be provided and maintained by the occupier for the use of the workers. Under section 47 shelters, lunch rooms and restrooms to e maintained for the use of workers. If SEZ units are now allowed to run in house cafeteria/canteen for them they will not be able to comply with the statutory requirement also.

If the permission is not granted it will jeopardize the implementation and execution of project plan of the appellant and it will require reworking on the entire project which may lead to delay and increased cost, over and above, negatively impact on export revenue/delivery commitments to clients and employment generation. It will also have the impact in the ease of working for employees including female employees. The Government policy of ease of doing business is also defeated. If the permission is granted that Government of India will earn valuable foreign exchange due to increase in exports.

Rule Position

Rule 11 of the SEZ Rules, 2006: Processing and non-processing area

(5) The land or built up space in the processing area or Free Trade and Warehousing Zone shall be given on lease only to the entrepreneurs holding a valid Letter of Approval issued under rule 19 and the lease period shall not be less than five years but notwithstanding any other condition in the lease deed, the lease rights would cease to exist in case f the expiry or cancellation of the Letter of Approval:

Provided that the Developer may, with the prior approval of the Approval Committee, grant on lease land or built up space, for creating facilities such as canteen, public telephone

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