IN FORCE Agenda SEZ / EOU / FTWZ 2010-11-18

Agenda of 43rd BOA meeting 18th November, 2010

Document text

Agenda for the 43rd meeting of the Board of Approval to be held on 21st October 2010
at 10.30 AM in the Room No. 47, Udyog Bhawan

Item No. 43.1: Policy for setting up of units for recycling of plastics in SEZs

In the meeting held on 9th April 2010 the Board directed that the policy for the plastic reprocessing units in SEZs should be finalized at the earliest. Accordingly, a draft policy was placed before the BoA in the meeting held on 16th September 2010. The Board decided to defer the item in view of the points raised by Department of Chemicals and Petrochemicals as also Department of Revenue. The matter is once again placed before the BoA.

Item No. 43.2 (a): Refund of service tax paid on taxable services provided in relation to the authorized operations in SEZs.

Notification No. 9/2009-Service Tax dated 03.03.2009 was issued to provide refund of service tax paid on taxable services specified in Section 65 (105) of the Finance Act, 1994 which are provided in relation to authorized operations (as defined under SEZ Act, 2005) in a Special economic Zone (SEZ), and received by a developer or units of a SEZ, whether or not the said taxable services are provided inside the SEZ. Subsequently, notification No. 15/2009-Service tax dated 20.05.2009 was issued to amend the aforesaid notification No. 15/2009-Service Tax dated 03.03.2009 to provide unconditional exemption to services consumed within the SEZ without following the refund route thus dispensing with the requirement of first paying the tax by the service provider and then claiming the refund thereof by developer/unit. The exemption by way of refund was thus limited to situations only when taxable services provided to SEZ are consumed partially or wholly outside the SEZ.

In cases where refund needs to be claimed, CBEC circular No. 114/8/2009-Service Tax dated 20.05.2009 requires that the refund claim shall be accompanied by the following documents:-

A copy of the list of specified services required in relation to the authorized operations in the SEZ, as approved by the Approval Committee;
Documents evidencing payment of service tax

The CBEC circular further states that 80% of the service tax refund amount due is to be sanctioned as ad-hoc interim refund to developer or unit of SEZ within 15 days of filing of a refund claim, subject to the condition that refund claim is complete and contains the requisite documents. The circular also states that the refund claims should be finalized within a maximum period of 30 days from the date of filing of refund claim and in any case not beyond 45 days from the date of filing of the refund.

There is a basic problem with this service tax refund arrangement for SEZs. Usually refund claims should be made by the service providers. Here, however, the refund claims are filed by the service users (SEZ Developers/Units). The CBEC instruction states that the refund claim should be supported by documents evidencing payment of service tax. These documents can be sourced only from the service provider who makes the payment. As per the current procedures, it is not possible for the service user to make direct payment of service tax. The services providers deposit the service tax collected by them into government account

vide GAR-7 challan. The service tax deposited by them may include the service tax collected by the service provider from the SEZ Unit/Developer as well as other DTA service recipients.

The unit in SEZs are finding it difficult to obtain the copies of GAR-7 challan through which the service provider deposits the service tax collected by them into Government account (document evidencing payment of service tax). Without this document, the jurisdictional Customs & Central Excise authorities are not settling the service tax refund claims filed by the SEZ Units/Developers.

Hence, it is suggested that Department of Revenue may consider introducing a procedure wherein the SEZ Units/Developers as service users/receivers can directly deposit the service tax into Government account. The SEZ Unit/Developer will then give a copy of the challan to the service provider, instead of paying service tax to the service provider. This procedure will safeguard the interests of the Government as well as facilitate speedy service tax refund to SEZ Units/Developers. The matter was considered in the BoA meeting held on 16th September 2010 wherein it was deferred and decided that Department of Revenue would furnish their views before the next meeting of the Board of Approvals.

Item No. 43.2 (b): Exemption of service tax paid on taxable services provided in relation to the authorized operations in SEZs.

During the course of the Open House Meeting in Hyderabad, the issue regarding exemption of service tax provided in relation to authorized operations in the SEZs was raised by the developers and units. While Rule 31 of the SEZ Rules provide for service tax exemption, however, the same has been replaced by Department of Revenue with reimbursement procedure for services rendered outside the SEZs and exemption for services rendered inside the SEZs. The Developers and units expressed their difficulties in claiming the reimbursement and would like exemption as provided for in the SEZ Rules irrespective of services availed inside or outside. As a follow up a meeting was held in the Department of Commerce on 5th October with the representatives of DGEP. It was indicated that the issue is to be considered by TRU of Department of Revenue. It was further decided that the matter would be placed before BoA where representatives from TRU could be requested to provide the requisite inputs.

Item No.43.3: Requests for co-developers

(i) Request of M/s. Mundra International Airport Private Limited for co-developer in the multi product SEZ at Kutch, Gujarat, being developed by M/s. Mundra Port and Special Economic Zone Limited (MPSEZL)

Multi Product SEZ at Kutch, Gujarat by M/s. Mundra Port and Special Economic Zone Limited stands notified over an area of 6472.8684 hectares. M/s. Mundra International Airport Private Limited, a 100% subsidiary of the developer has submitted a proposal for becoming a co-developer in the SEZ to develop, operate and maintain an airport and related infrastructure facilities including airfield pavements, communication and navigational aids, visual aids, passenger and cargo terminals and equipments, support services, warehousing facilities and MRO facilities, over an area of around 175 hectares. The request was considered in the BoA meeting held on 16th September 2010, wherein, the representative of the Department of Revenue indicated that the proposal is for setting up a full-fledged international airport which will handle cargo as well as passengers. Considering that Mundra SEZ has very small complement of custom staff, they will not be able to manage the airport.

Further, the airport will handle DTA and SEZ cargo and if it is set up in the processing area of the zone, it will be difficult for the Revenue Authorities to manage the cargo. After discussions, it was decided that Department of Revenue would crystallise their views and bring it before the BoA during its next meeting.

Accordingly, the proposal is placed before the BoA for consideration.

(ii) Request of M/s. Hind Terminals (Mundra) Private Limited for co-developer in the multi product SEZ at Mundra, Kutch, Gujarat, developed by M/s. Mundra Port and Special Economic Zone Limited

The above multi product SEZ is notified over an area of 6472.8684 hectares. M/s. Hind Terminals (Mundra) Private Limited has requested for becoming a co-developer for developing and operating a Container Freight Station and Warehousing Facilities on an area of 16.19 hectares. The proposal was considered in the BoA meeting held on 16th September 2010, wherein, it was decided since Department of Revenue, has reservations about this proposal, it is preferable that they also indicate a line of action. After discussions, it was decided that Department of Revenue would crystallise their views and bring it before the BoA during its next meeting. A communication in this regard has been received from Member Customs who was expressed reservations about the proposal. A copy of Member Customs’ communication is at Annexure – 1.

A follow up meeting was held on in the Department of Commerce on 5th October 2010 and the consensus was that the proposal of M/s. Hind Terminals could be considered in terms of the segregating the SEZ cargo and DTA cargo and both being assessed by the SEZ customs authorities and jurisdictional customs authorities.

Accordingly, the proposal is placed before the BoA for consideration.

(iii) Request of M/s. Chiplun FTWZ Private Limited for co-developer in the FTWZ at village Chanje, Taluka Uran, District Raigad, Maharashtra, being developed by M/s. Karanja Infrastructure Private Limited

Sector specific SEZ for IT/ITES at village Chanje, Taluka Uran, District Raigad, Maharashtra by M/s. Karanja Infrastructure Private Limited was notified on 18th August 2009 over an area of 40.02.08 hectares. M/s. Chiplun FTWZ Private Limited has submitted a proposal for becoming a co-developer for development of infrastructure in the entire processing area of 40.02.08 hectares of the SEZ. Co-developer agreement dated
13th July, 2010 between the developer and co-developer and its supplementary agreement dated 3rd September 2010 have been provided. The request of the co-developer is submitted for consideration of BoA.

(iv) Request of M/s. Kalyani Global Engineering Private Limited for co-developer in the multi product SEZ at Taluka Khed & Shirur, District Pune, Maharashtra, being developed by M/s. Khed Economic Infrastructure Private Limited

The above mentioned SEZ was notified on 16th June, 2010 over an area of
1000 hectares. M/s. Kalyani Global Engineering Private Limited has submitted a proposal for becoming a co-developer for providing infrastructural facilities by undertaking all the default Authorized Operations in the above mentioned SEZ. The proposal was considered in the BoA meeting held on 16th September 2010, wherein the Board had noted that the co-developer

agreement does not reflect the status of the co-developer correctly. The developer has submitted the revised co-developer agreement dated 30th September 2010 between the developer and co-developer. The request of the co-developer is again submitted for consideration of BoA.

Item No. 43.4: Requests for first extension of validity of formal approvals

(i) Request of M/s. Tata Consultancy Limited for extension of the validity period of formal approval, granted for setting up of sector specific SEZ for IT/ITES at I.T Plot (IIF/3), Action Area-II, New Town, Kolkata,West Bengal, beyond 13th December 2010.

(ii) Request of M/s. Gujarat International Finance Tec-City Company Limited (GIFTCL) for extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Multi Services at village Ratanpur and Phirozpur, Gandhinagar District, Gujarat, beyond 6th January 2011.

(iii) Request of M/s. Rakindo Kovai Township Private Limited for extension of the validity period of formal approval, granted for setting up of sector specific SEZ for IT/ITES at Perur Chettipalayam village, Coimbatore South, Coimbatore District, Tamil Nadu, beyond 4th December 2010.

Item No. 43.5: Requests for second extension of validity of formal approvals

(i) Request of M/s. Gitanjali Gems Limited for second extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Gems & Jewellery at Panvel, Maharashtra, beyond 24th October 2010

The developer was granted formal approval for setting up the above mentioned SEZ, over an area of 10.21 hectares, vide LoA dated 25th October 2006. The SEZ was notified on
9th June 2008 over an area of 10.035 hectares. The developer has been granted first extension of the formal approval, the validity of which is up to 24th October 2010. The developer has given the details of steps taken to implement the project. The developer has stated that the required permissions are in process. The developer needs more time to complete the project and has, therefore, requested for grant of further extension of validity of the formal approval.

(ii) Request of M/s. Adityapur Industrial Area Development Authority for second extension of the validity period of formal approval, granted for setting up of sector specific SEZ for Automobiles/Auto Components at Adityapur, Jharkhand, beyond
13th June 2010

The developer was granted formal approval for setting up the above mentioned SEZ, over an area of 36.42 hectares, vide LoA dated 14th June 2006. The SEZ is yet to be notified. The developer has been granted first extension of the formal approval, the validity of which is up to 13th June 2010. The developer has stated that the despite close follow up with the Department of Forest & Environment the forest land involved in this SEZ project has not yet been cleared which has led to the delay. The developer needs more time to complete the project and has, therefore, requested for grant of further extension of validity of the formal approval beyond 13th June 2010.

Item No. 43.6: Request for grant of third extension of in-principle approval.

S. No. Name of the Developer Sector and area Location of the SEZ Percentage of land in possession of developer as on expiry of validity of in- principle approval 1. M/s. Nanded SEZ Limited Gems & Jewellery, 50 hectares Nanded, Maharashtra In-principle approval was granted to the proposal vide LoA dated 25th June, 2007. Thereafter the validity of the LoA was extended up to 25th June 2010. The developer sought further extension stating that it has approached MIDC for allocating the industrial land/undeveloped land in Nanded.

Item No. 43.7: Contiguity Relaxation

(i)
Request of M/s. Navi Mumbai SEZ Private Limited for relaxation of conditions of LoA regarding contiguity and multiple entry/exit gates

M/s. Navi Mumbai SEZ Private Limited was granted formal approval for setting up of multi product SEZ at Dronagiri, Navi Mumbai, Maharashtra vide LoA dated 30.07.2007. The said SEZ was notified on 21.11.2007 over an area of 1233.6767 hectares. In the BoA meeting held on 5th November 2009 the following request of the developer was considered:-

(a) Relaxation of condition originally imposed for ensuring contiguity; (b) Relaxation of the condition of construction of under passes, for which they have suggested secured connectivity on the ground, and (c) Approval for construction of seven multi entry/exit points in their Multi Product SEZ at Dronagiri, Navi Mumbai, Maharashtra (in view of relaxation sought vide (b) above); (d) Approve two numbers of sky walks in place of flyovers for establishing contiguity between processing areas.

The request was last considered in the BoA meeting held on 11th February 2010 and was deferred on the request of Department of Revenue.

Further when the proposal was considered by BoA in its meeting held on
16th September 2010, the developer provided a revised proposal Annexure - 2. Department of Revenue sought deferment of the proposal as they required more time to study the revised proposal. Accordingly, the proposal is brought before BoA for its consideration

Item No. 43.8: Requests for de-notification

(i) Request of Omnibus Industrial Development Corporation of Daman & Diu and Dadra & Nagar Haveli Limited (OIDC) for de-notification of the sector specific SEZ for IT/ITES at Khardpada, Naroli, Dadra & Nagar Haveli, notified over an area of
12.81 hectares

The above mentioned SEZ was notified on 18th August 2009 over an area of 12.81 hectares. Now, the developer has requested for de-notification of the SEZ stating that the Board of Directors of OIDC in the 99th Meeting of the Board held on 30.06.2010 have

resolved not to develop the proposed IT/ITES SEZ as the same is no longer feasible in view of the changed economic scenario.

The request of the developer for de-notification is placed before BoA for consideration.

(ii) Request of M/s. Ajanta Projects (India) Ltd. for de-notification of the sector specific SEZ for Non-conventional Energy including Solar Energy (originally Biotechnology) at Plot No. C-22, Five Star Industrial Area, Shendra, Aurangabad, Maharashtra, notified over an area of 10 hectares

The above mentioned SEZ was notified on 5th August 2008 over an area of 10 hectares. Now, the developer has requested for de-notification of the SEZ due to the global economic slowdown and uncertainty regarding applicability of various provisions of DTC which has adversely impacted investment by units in the SEZ. The developer has also undertaken to the refund the duty benefits availed under the SEZ Act/Rules.

The request of the developer for de-notification is placed before BoA for consideration.

(iii) Request of M/s. Ajanta Projects (India) Ltd. for de-notification of the sector specific SEZ for Pharmaceutical at Plot No. C-21, Five Star Industrial Area, Shendra, Aurangabad, Maharashtra, notified over an area of 100 hectares

The above mentioned SEZ was notified on 22nd October 2008 over an area of
100 hectares. Now, the developer has requested for de-notification of the SEZ due to the global economic slowdown and uncertainty regarding applicability of various provisions of DTC which has adversely impacted investment by units in the SEZ. The developer has also undertaken to the refund the duty benefits availed under the SEZ Act/Rules.

The request of the developer for de-notification is placed before BoA for consideration.

Item No. 43.9: Requests for withdrawal of formal approval

(i) Withdrawal of formal approval granted to M/s. DivyaSree Infrastructure Projects Private Limited for setting up of sector specific SEZ for IT/ITES at Bellandur Amani Kane, Off Airport Road, Bangalore, Karnataka

M/s. DivyaSree Infrastructure Projects Private Limited was granted formal approval for setting up of sector specific SEZ for IT/ITES at Bellandur Amani Kane, Off Airport Road, Bangalore, Karnataka, over an area of 19 hectares, vide LoA dated 26th October 2006. The developer has also been granted two extensions. The validity of the LoA is up to 25th October 2011. Now, the developer has stated that its Board of Directors has now re-evaluated their plan for the development of SEZ and they feel that it will not be financially feasible to develop the above SEZ project due to the ongoing uncertainty in the world economies and its trickle effect on the IT/ITES sector. While, some momentum has come back since the lows of 2009, the same is not sufficient to make the project financially viable. In addition to his, the uncertainty regarding the availability of the tax holiday to units set up in the SEZ under the proposed Direct Tax Code regime has also adversely impacted the demand for space in IT/ITES SEZs. The developer has, therefore, requested for withdrawal of formal approval.

The developer has also intimated that no development/construction activity has taken place in the approved SEZ and, therefore, no fiscal benefits have been availed till date.

The request of the developer is placed before the BoA for consideration.

(ii) Withdrawal of formal approval granted to M/s. Indo Global Infotech City Private Limited for setting up of sector specific SEZ for IT/ITES at village Hinjewadi, Taluka Mulshi, Pune, Maharashtra

M/s. Indo Global Infotech City Private Limited was granted formal approval for setting up of sector specific SEZ for IT/ITES at village Hinjewadi Taluka Mulshi, Pune, Maharashtra, over an area of 13.35hectares, vide LoA dated 21st November 2008. The developer has informed that they are unable to comply with various requirements of SEZ and are not able to carry out the SEZ project. The developer has, therefore, requested for withdrawal of formal approval.

The request of the developer is placed before the BoA for consideration.

Item No. 43.10: Request of M/s. Wardha Power Company Private Limited for withdrawal of the approval of the BoA for de-notification of the sector specific SEZ for Power at Warora, Chandrapur District, Maharashtra, notified over an area of 101.47 hectares

Sector specific SEZ for power at Warora, Chandrapur District, Maharashtra being developed by M/s. Wardha Power Company Private Limited (WPCL) was notified on 3rd September, 2008 over an area of 101.47 hectares.

The developer had requested for de-notification of the SEZ. The request was approved in the BoA meeting held on 9th April, 2010 and the decision of the BoA was conveyed to the developer vide letter dated 19th April, 2010. The SEZ has not yet been
de-notified. The justification of the developer is at Annexure- 3.

The request of the developer is submitted for consideration of BoA.

Item No. 43.11: Requests of Authorized Operations

(i) Request of M/s J.B. SEZ Private Limited for authorized operations in the sector specific SEZ for Pharmaceutical at Panoli near Ankleshwar, Bharuch District, Gujarat

Sector specific SEZ for Pharmaceutical at Panoli near Ankleshwar, Bharuch District, Gujarat by M/s. J.B. SEZ Private Limited was notified on 9th January, 2009 over an area of 125.04.94 hectares. The developer has requested for the following authorized operations in the non-processing area:-

S. No. Name of the authorized activity No. of units Area per unit (in sqm) Total area (in sqm)

Residential 79946.24 a) TYPE 1 – Apartment Building 32 1454.44 46542.08

b) TYPE 2 – Apartment Building 48 695.92 33404.16

Commercial 10905.95 a) Convenient Shopping + Office +Theatre 1 3144.24 3144.24

b) Hotel 1 7761.71 7761.71

Facility Buildings 11151.72 a) JB SEZ Admin Bldg with Custom Office + Bank + Cafeteria + Dormitories 1 1486.57 1486.57 b) Educational Institute/ Vocational Training/School 1 3646.15 3646.15 c) Health Care Center/Hospital 1 574.04 574.04 d) Fuel Pump 1 335.46 335.46 e) Electrical Power Station 1 1189.00 1189.00 f) Central Sewage Treatment Plant 1 2173.00 2173.00

g) Truck Terminal with Ancillary Facilities

Police Station
Fire Station
Restaurant +Toilet Block

1 1 1

600.00 337.50 810.00 1747.50

DC, KASEZ, has recommended the request of the developer. Report of the DC is at Annexure - 4.

(ii) Request of M/s Dishman Infrastructure Limited for authorized operations in the sector specific SEZ for Pharmaceuticals & Fine Chemicals at village Kalyangadh & Gangad, Taluka Bavla, District Ahmedabad, Gujarat

The above mentioned SEZ was notified on 13th November 2009, over an area of 106.83.83 hectares. The developer has requested for the following authorized operations in the processing/non-processing area:-

S. No. Name of the authorized activity No. of units Area per unit (in sqm) Total area (in sqm)

In the processing area

Steam Generation Plant and Distribution Network
1 NA NA

In the non-processing area

Residential Flats

11760

(i) A Type Flat
48 145 6960

(ii) B Type Flat 48 100 4800

Guest House 1 NA 1000

DC, KASEZ, has recommended the request of the developer. Report of the DC is at Annexure - 5.

Item No. 43.12: Request for change of sector/broad-banding the sector

(i) Request of Gujarat Industrial Infrastructure Development Corporation for change of sector of notified SEZ at Ahmedabad, Gujarat from ‘Apparel’ to ‘Textiles & Articles of Textiles’

The above mentioned SEZ was notified on 10th April 2007 over an area of 38.04.13 hectares at Ahmedabad, Gujarat. The developer has requested for change of sector of the SEZ from ‘Apparel’ to ‘Textiles & Articles of Textiles’. The request was considered in the meeting of BoA held on 8th June 2010, wherein, the representative of Government of Gujarat indicated that the notified SEZ is wholly owned enterprise of Government of Gujarat. The apparel units in this SEZ are disadvantageously placed as compared to the DTA units and the SEZ cannot be de-notified till all the units exit. Hence to provide the requisite comfort level it has been decided to request for change of sector from ‘Apparel’ to ‘Textiles & Articles of Textiles’. It was noted by the Board that this is an Annexure – II case where the minimum area requirement is only 38 hectares and without amending the SEZ rules, the change of sector as requested for by the developer cannot be considered. Since SEZ have been amended by way of substituting the words “Textiles and Articles of Textiles” for the words “Apparel” in serial number 3 of column (3) of the Annexure-II of the SEZ Rules (Annexure - 6) , the request is placed before the BoA for consideration.

(ii) Request of Gujarat Industrial Infrastructure Development Corporation for change of sector of notified SEZ at Surat, Gujarat from ‘Apparel’ to ‘Textiles & Articles of Textiles’

The above mentioned SEZ was notified on 23rd June 2005 over an area of
56.64 hectares at Surat, Gujarat. The developer has requested for change of sector of the SEZ from ‘Apparel’ to ‘Textiles & Articles of Textiles’. The grounds on which change of sector has been sought are similar to the one mentioned at (i) above as the developer is same in both the cases. This is also an Annexure – II case. Since SEZ have been amended as mentioned above, the request is placed before the BoA for consideration.

The request of the developer is placed for consideration of BoA.

(iii) Request of M/s. CCCL Pearl City Food Port SEZ Limited for broad banding of the sector of the SEZ for “food processing” by including allied industries relating to food processing industry

The above mentioned sector specific SEZ for “Food Processing” near Tuticorin, Tamil Nadu was notified on 23.04.2009 over an area of 119.145 hectares. The developer has requested for broad banding of sector so as to include allied industries like packaging industries and equipment manufactures relating to food processing industry. The developer has stated that it has been receiving enquiries from manufacturers of packaging items for food industry, packaging machinery manufacturers and also food processing machinery manufacturers for setting up of units. Further, presence of such units in the SEZ of land to such entrepreneurs.. Further, user industry will be vastly benefited by the presence of such companies at the SEZ itself and also these companies would also apart from satisfying the needs of the units inside the SEZ will also be able to export to countries like South Africa, Middle East, South East, Asian regions etc and earn valuable foreign exchange.

DC, MEPZ has recommended the request of the developer stating that inclusion of allied industries such as packaging industries and machinery manufacturers for food processing industry which will facilitate the units in the zone to start their operations faster by getting the machineries and packing materials within the zone. This will also provide wider scope of attracting more units related to the industry and consequent increase in exports from the zone.

The request of the developer is submitted for consideration of

Item No. 43.13: Request of M/s. Indiabulls Realtech Limited, a co-developer in the multi product SEZ being developed by M/s. Indiabulls Industrial Infrastructure Limited at Nasik, Maharashtra, for waiver of the condition prohibiting trading bricks and blocks made out of thermal ash in the DTA

Multi Product SEZ at Nasik, Maharashtra, being developed by M/s. Indiabulls Industrial Infrastructure Limited was notified on 27th October 2009, over an area of 1006.96 hectares. M/s. Indiabulls Realtech Limited has been granted approval for becoming a co- developer in the aforesaid SEZ, for setting up a 1350 MW Power Plant. In the BoA meeting held on 8th June 2010, the co-developer was inter-alia granted approval for Ash Utilisation and beneficiation such as brick and block making plant over an area of 2.5 acres as an authorized operation subject to condition that the co-developer will not trade the bricks and blocks made out of thermal ash in the DTA.

The co-developer has now requested for waiver of condition prohibiting trading bricks and blocks made out of thermal ash in the DTA area. The detail justification furnished by the co-developer is at Annexure - 7. The request of the developer is submitted for consideration of the BoA. The proposal was considered in the BoA meeting held on 16th September 2010 and it was decided that the BoA would consider this proposal in its next meeting by which time the Revenue Authorities may indicate possible solutions for its consideration.

Item No. 43.14: Request of M/s. Apollo Hospitals Enterprise Limited for authorized operations as co-developer in the manufacture and assembling of electronics, telecommunication and IT hardware and development of software, R&D services and other services in telecommunication SEZ at Sriperumbudur, Tamil Nadu developed by M/s. Nokia India Private Limited

Sector specific SEZ for manufacture and assembling of electronics, telecommunication and IT hardware and development of software, R&D services and other services in telecommunication at Kancheepuram, Tamil Nadu by M/s. Nokia India Private Limited was notified on 17th August 2005 over an area of 85.375 Ha. The said SEZ was re- notified on 19th July 2006. M/s. Apollo Hospitals Enterprise Limited has been approved as a co-developer in the aforesaid SEZ vide, LoA dated 21st August, 2009. In the 37th BoA meeting held on 15th December 2009 the co-developer was granted approval for setting up of 60 bedded hospital (having an area of 4,010 sqm.) as an authorized operation in the non- processing area of the SEZ, subject to the following:

(a) The hospital will provide coverage only to the zone, adjoining SEZ zones and trauma cases arising out of accidents on the highway;
(b) No outside patients will be entertained other than the category specified above; and

(c) Nokia SEZ, the developer must be informed of the decision of the BoA in this regard so that the spirit of the approval is maintained

The developer has requested for waiver of the above conditions stating that it interferes with their professional medical ethics, is not commercially viable and can cause serious operational ineffectiveness leading to loss of lives. The request was considered in the BoA meeting held on 9th April 2010. BoA, decided to defer the request of M/s. Apollo Hospitals Enterprise Limited and directed that the detailed justification be obtained from the co-developer for relaxing the conditions which should also include the reasons why a large SEZ like Nokia and other adjacent SEZs are not adequate to provide sufficient patient load. The developer has since furnished justification for waiver of the conditions (Annexure - 8). The matter was considered in the BoA meeting held on 16th September 2010 and the Board decided to defer the consideration of the proposal for a more detailed study of the proposal and directed that the proposal be placed before it in its next meeting.

The request of the developer is again submitted for consideration of the BoA.

Item No. 43.15: Request for approval of construction of Boundary Wall

(i) Requests for additional boundary wall in respect of sector specific SEZ for Biotechnology at Hinjewadi, District Pune, Maharashtra by M/s. International Biotech Park Limited

The above mentioned SEZ was notified on 22nd May 2009, over an area of
12.87 hectares. The developer has now requested DC SEEPZ for approval of 2 nos entry/exit points to the processing area. The developer has stated that in view of the pattern of demand being received from the prospective units, it has been decided to develop their SEZ in phased manner to optimize on development costs and considering operational requirements of the prospective industrial units. The first phase identified for processing area construction is strategically located in the longitudinal centre of the 5 KM length of the site. Accordingly, an area of 18203 hectares has been earmarked to be developed as processing area in first phase. This has necessitated second entry/exit point. The DC has referred to rule 11 (2) of SEZ rules 2006 of the SEZ rules and has requested that the request of the developer be placed before the BoA.

Item No. 43.16: Request for setting up of units for processing of pulses

(i) Request of M/s. Prakash Overseas, for setting up Pulses Processing unit in Indore SEZ

DC, ISEZ has forwarded request of M/s Prakash Overseas, a partnership firm for setting up a pulses processing unit in Indore SEZ. DC has stated that as per the application and other related documents received from the unit, the group is in this trade for more than 35 years and are already importing pulses from Australia, Canada, USA, Africa, Dubai etc.
Further the group claims they were exporting finished pulses in the past, before export of the same was prohibited. The unit has further submitted that the purpose of setting up the unit is to import raw material from various sources across the globe and export the value added pulses to consumption centers. DC has stated that the request of M/s Prakash Overseas was considered in the Approval Committee and Committee decided to refer the case to the BoA for approval. It is for consideration of the BoA as to whether M/s Prakash Overseas be allowed to setup a Pulse Processing Unit for export of pulses. The request of the unit was

considered in the BoA meeting held on 9th April 2010, wherein, the Board noted that these are very sensitive products and there is requirement of clear policy for import and export of these products. Pending the availability of such policy, the Board decided to defer the requests of M/s. Prakash Overseas.

It is submitted that an amendment has been made in the SEZ Rules on 7th September 2010, whereby, the following proviso has been inserted after the second proviso of Rule 27 (1) of the SEZ Rules:- “Provided also that items prohibited for import can be procured by a Special Economic Zone unit or Developer from a place outside India to the Special Economic Zone with the prior approval of Board of Approval”,

In view of the above mentioned amendment, the request of M/s. Prakash Overseas for setting up of a unit in ISEZ for import, processing, trading and export of pulses is placed before the BoA for consideration.

(ii) Request of M/s. Kogta Import Export Private Limited, for setting up Pulses Processing unit in multi product SEZ at Sinnar, District – Nasik, Maharashtra, being developed by M/s. Indiabulls Industrial Infrastructure Limited

DC, Navi Mumbai SEZ have forwarded the request of M/s. Kogta Import Export Private Limited, for setting up of a setting up of a pulse processing unit having an annual capacity of 6000 MT in the above mentioned SEZ. The products to be manufactured and exported are prohibited items for exports as per ITC (HS) Code – 0713. DC has, therefore, requested that the request is placed before the BoA for consideration. The detailed agenda item as received from DC Navi Mumbai SEZ is at Annexure - 9.

(iii) Request of M/s. Diet Foods International, for setting up Pulses Processing unit in multi product SEZ at Nagpur, Maharashtra, being developed by Maharashtra Airport Development Authority (MADC)

DC, SEEPZ SEZ have forwarded the request of M/s. Diet Foods International, for setting up of a setting up of a pulse processing unit in the above mentioned SEZ. The products to be manufactured and exported are prohibited items for exports, DC has, therefore, requested that the request is placed before the BoA for consideration. The detailed agenda item as received from DC SEEPZ SEZ is at Annexure - 10.

(iv) Request of M/s. Kitchen Express Overseas Limited, Ahmedabad for setting up unit in KASEZ for manufacturing of Processed Pulses, Grains, Spices, Lentils etc. as well as trading activities of Pulses, Grains, Spices, Lentils etc.

M/s. Kitchen Express Overseas Limited, Ahmedabad has proposed to set up a unit for manufacturing of Processed Pulses, Grains, Spices, Lentils etc. as well as trading activities of Pulses, Grains, Spices, Lentils etc in the KASEZ. DC, KASEZ, has informed that the firm has plans to import the raw material for manufacturing or finished goods for trading and no DTA purchase or sale will be made. The firm is Limited Company and their proposed project cost is Rs. 100 lakhs. The FOB value of export projected for 5 years period is Rs. 12600 lakhs agaist foreign exchange outgo of Rs. 11387 lakhs with net foreign exchange achievement is Rs. 1213 lakhs.

The firm was formally known as M/s. Ramdev Exports and a group company of Ramdev Masala Group incorporated in 1967. The firm is already well known and established with lot of expertise in manufacturing/process/trading, import/export of spices, condiments, grocery, Pickles, ready to eat and food stuff in the Indian as well as overseas market under the brand name of Kitchen Express.

The firm proposes to import their products, process and export without affecting Indian Agricultural Produce and also earn net foreign exchange for the country. The firm has also stated that they have firm export orders for their activities.

The proposal of M/s. Kitchen Express, Ahmedabad was discussed in an Approval Committee for SEZ, KASEZ in its meeting held on 06.04.2010 and it was decided to give in- principle approval for items except Pulses & Lentils for manufacturing and trading activity vide Letter No. KASEZ/IA/2010-11 dated 21.04.2010 and the committee noted that Pulses & Lentils are sensitive items and it was decided to refer to the BoA.

The request is, therefore, placed before the BoA for consideration.

Item No. 43.17: Request of M/s. Sukhi India Pvt. Ltd., a unit in FALTA SEZ for extension of validity of LoP

M/s. Sukhi India Private Limited had been approved vide LOP No. FEPZ/LIC/S- 37/96/2600 dated 18.10.1996 to set up a unit in Falta Special Economic Zone for manufacture and export of Plastic Granules, Reprocessed Plastic Agglomerates and Lay Flat Tubes. The unit had commenced production on 14.07.1999. On completion of the 2nd block of five years of operation, the unit had requested to renew the LOP for a further period of five years beyond 14.07.2009. The request was considered in the BoA meeting held on
11th August 2009 and extension of the one year was granted to the unit w.e.f. 14.07.2009.

The unit has once again requested FSEZ for renewal of its LOP for the remaining period of four years of the 3rd block of five year period. The unit has submitted the Annual Performance Report for the financial year 2009-10 vide its letter No. Nil dated 1st September, 2009 which shows the performance as given below:-

                                                                      (Figure in Rs. Lakh)

Year Export Import (total outflow) N.F.E 2009-10 2035.35 1672.93 362.42

DC, FSEZ, has stated that the unit has been functioning continuously for the last 11 years and has employed 500 labourers. Therefore, the DC has recommended for extension of the LOP for a further period of four years w.e.f. 14.07.2010 i.e. upto 13.07.2014.

The request of the unit is placed before the BoA for consideration.

Item No. 43.18: Request for transfer of unit from one SEZ to another

(i) Request of M/s. InterGlobe Technology Quotient Private Limited, a unit in Noida SEZ for shifting its location to sector specific SEZ for IT/ITES at Gurgaon, Haryana, being developed by M/s. Gurgaon Infospace Limited

M/s. InterGlobe Technology Quotient Private Limited has been granted LoA dated 23rd February 2005 for setting up a unit in Noida SEZ for undertaking for Data Processing (Software Exports) services. The unit has set up its operations in the NSEZ on an aggregate area measuring 670 sqm. The unit has stated that it had commenced operations on
1st June 2006 and till 31st March 2010 has made investments amounting to Rs. 323.67 lakhs, undertaken exports of Rs. 64410.14 lakhs and employed 349 professional staff. It has also been stated that till 31st March 2010 NFE of Rs. 59032.62 lakhs has been achieved.

The unit has stated that it is desirous of employing new employees with a view to expand with a view to expand its current business operations in India. Since the existing area would not meet the current requirements, it would like to relocate from NSEZ to M/s. Gurgaon Infospace Limited, Gurgaon, Haryana. Further, by relocating to M/s. Gurgaon Infospace Limited it would benefit by having access to the world class infrastructure being provided by the said SEZ developer and additional space which is presently not available in NSEZ. The detailed justification given by the unit for the proposed transfer is at
Annexure - 11. The request of the unit is placed before the BoA for consideration.

Item No. 43.19: Extension of LoP of M/s. Ucal Fuel Systems Limited beyond fourth year for a period of one year

M/s. Ucal Fuel Systems Limited, a unit in Mahindra World City SEZ was granted LoP for manufacture and export of Rocker Arm Inlet, Rocker Arm Exhaust, Body Roller Tappet and GM Shaft on 31.07.2006. The unit has been granted three extension of the LoP. The validity of the last extension was up to 30th July 2010.

The unit has requested DC MEPZ for the fourth extension of the LoP stating that it is passing through difficult situation because of recession in U.S Automobile market vis-a-vis its plants in U.S. and in India. The unit has further stated that with the markets looking up it expects export business to pick up, therefore, it has commenced the construction activity and has planned exports by April, 2011. DC, MEPZ, has recommended the request of the unit.

Rule 19(4) of SEZ Rules, 2006 provides only for a maximum of 3 years (2 years in the first instance and further 1 year subject to certain conditions). Rule 19(5) provides that the letter of approval shall be deemed to have lapsed after the validity given under Rule 19(4).

In past, keeping in view of the slowdown in world economy, we had granted general extension of one year, beyond four years, in respect of LoPs being completed between 01.03.2009 to 28.02.2010 (both dates inclusive).

Keeping in view the similar difficulties faced by the units, Rule 19(4) of the SEZ Rules 2006 has been amended enabling Board of Approvals to grant further extension to the units beyond 4 years, for a period of one year at a time,. The notification of the proposed amendment is likely to be issued shortly.

In this particular case, in view of the position stated by the unit, extension of LoP of a unit has been granted for one year w.e.f. 1st August 2010. The matter is placed before the BoA for ratification.

Item No. 43.20: Appeals before BoA

(i) Appeal of M/s. NSL SEZ (Hyderabad) Private Limited against the decision of the BoA rejecting the request of the developer for waiver of the condition of exclusive use of residential apartments by SEZ employees

Sector specific SEZ for IT/ITES SEZ at IDA Uppal Industrial Development Area, Hyderabad, Andhra Pradesh being developed by M/s. NSL SEZ (Hyderabad) Private Limited was notified on 18th May 2007 on an area of 14.50 hectares. BoA had granted approval to the developer for construction of residential apartments (1250 units) over an area of 200000 sqm, in the non-processing area, subject to the condition that the residential apartments will be for exclusive use of the SEZ employees The request of the developer for waiver of the condition of exclusive use of the residential apartments by the SEZ employees was considered in the BoA meeting held on 8th June 2010 and was not agreed to. The decision of the BoA was communicated to the developer vide letter dated 21st June 2010. Thereafter, the developer had filed an appeal before the BoA for review of decision taken in the meeting held on 8th June 2010.

The Board was informed that in the past many cases, approvals for construction of residential apartments have been sanctioned without insisting on the condition of exclusive use of these apartments by the SEZ employees. The Board taking note of this position, however, felt that the quantity approved of 1250 units is very large and directed that DC should review the numbers and come back before the Board for its consideration. The matter was considered in BOA meeting held on 16th September 2010, wherein, the Board directed VSEZ to send a detailed report.

DC VSEZ has since submitted his report as per the directions of the Board of Approval (Annexure – 12). The matter is, therefore, placed before the BoA.

(ii) Appeal of M/s. Msource (India) Private Limited, against the order of DC IT/ITES Bangalore, for rejecting its request for setting up of a unit in the IT/ITES SEZ

M/s. Msource (India) Private Limited is wholly owned subsidiary of Mphasis Limited and is engaged in the business providing value added voice and transaction based contact center and business process outsourcing services to Fortune 500 companies worldwide. The Appellant had filed an application on 18th August 2010 before the Development Commissioner for IT/ITES SEZ seeking approval for setting up of SEZ unit of 85.141 sq. ft. (excluding cafeteria area) with an investment to be transferred from an existing unit of the company, located at Millenia 6 Building, Murphy Road, Bangalore. The said unit at Millenia was registered under the Software Technologies Parks of India, Scheme (“STPI Scheme”).

A letter stating that, assets from the existing STPI unit would be transferred to the proposed SEZ unit was made to the DC along with the fact that no direct tax benefits would be availed for the business proposed to be operated in the proposed SEZ unit, considering that the proposed quantum of assets to be transferred was likely to be in excess of the 20 percent limit as specified under the provisions of Section 10 AA of the Income Tax Act, 1961. The

letter was filed by the company in accordance with the Instruction 11 dated August 12, 2009 issued by the Department of Commerce, Ministry of Commerce and Industry

However, the application of the company was rejected by the DC vide their letter dated 27th August, 2010, stating inter-alia that “as per the prevailing rule/guidelines, your request to transfer the existing STP business to SEZ, in entirety cannot be considered”.

Aggrieved by the rejection of the application without placing the same before UAC, the appellant filed a letter on 7th September 2010 before the DC requesting for the following information:-

• Whether the SEZ unit application of the Appellant was placed before the UAC • If the SEZ unit application was not placed before the UAC, the specific reasons and the provisions under the SEZ Act, 2005 (“SEZ Act”) & SEZ Rules, 2006 under which the application for setting up a SEZ unit was rejected as required by the proviso to Rule 18 (1) of the SEZ Rules.

The appellant has not received a reply in this regard neither his request for setting up of SEZ unit has been placed before the UAC meeting held on 13th September 2010.

Aggrieved by above reasons, the company has preferred this appeal before the Board of Approval.

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