Counsel for the Centre Parth Bhatt told DNA that several such units are operating in the Kandla SEZ
In a major relief for the union government, the Gujarat High Court has upheld a 2013 policy of the Ministry of Commerce and Industry that restricts plastic scrap recycling and worn clothes units operating in special economic zones (SEZs) from selling their products in domestic tariff area (DTA). Counsel for the Centre Parth Bhatt told DNA that several such units are operating in the Kandla SEZ.
The Union government's policy dated September 17, 2013, imposed conditions on these units to ensure physical exports out of India to the extent of 40 per cent at the end of the second year, 80 per cent at the end of the fourth year, and 100 per cent at the end of the fifth year.
The division bench of Acting Chief Justice AS Dave and Justice Biren Vaishnav, while pronouncing its verdict, also set aside and quashed the orders of two single judge benches of the court which had ruled against the union government. Notably, the union government had moved the division bench against the orders of the single judges. The division bench has clarified that the policy of the union government in the case of both plastic and worn clothes units cannot be said to be without authority of law.
Notably, the plastic-scrap recycling units were involved in manufacturing recycled plastic raw material from imported scrap, whereas the cloth units import worn and used clothing, and segregate and recondition the same into export and non-export grade clothing. Export worthy grade clothing was thereafter exported, whereas the non-exportable grade clothing was used, after mutilation, for obtaining industrial raw materials like industrial wiper, mops, and mutilated rags. The non-export worthy products made their way into the DTA.
Notably, the units in question had initially approached the single judge benches of the high court claiming that they were earlier permitted to sell their products in DTA and such sales were achieving positive net foreign exchange as required under the SEZ Rules, 2006. The units claimed that the SEZ Act did not prohibit them from supplying products to consumers in DTA, but the same was restricted through the 2013 policy which was allegedly in contravention of norms.
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