Approval Committee
Section 2(b) of Special Economic Zone Act, 2005 (‘Act’ for short) defines the expression ‘approval committee’ as an Approval Committee constituted under sub-section (1) of section 13.
Section 13(1) provides that the Central Government has to constitute within six months from the date of commencement of such economic zone constitute a committee for every special economic zone to be called as the Approval Committee.
Members of the Committee
Section 13(2) provides that every approval committee shall consist of-
- the Development Commissioner - Chairperson, ex officio;
- two officers of the Central Government to be nominated by the Central Government - Members, ex-officio;
- two officers of the Central Government to represent the Ministry or Department dealing with revenue - Members, ex-officio;
- one officer of the Central Government to be nominated by that Government to represent the Ministry or Department dealing with the economic affairs (financial services) - Members, ex-officio;
- two officers of the State Government concerned to be nominated by that Stated Government - Member, ex-officio;
- a representative of the Developer concerned - Special invitee.
Tenure of ex-officio members
The term of office of an ex officio Member shall come to an end as soon as he ceases to hold the office by virtue of which he was so nominated.
Functions of the approval committee
The following are the functions of the approval committee-
- approve the import or procurement of goods from the Domestic Tariff Area, in the Special Economic Zone for carrying on the authorized operations by a Developer;
- approve the providing of services by a service provider, from outside India, or from the Domestic Tariff Area, for carrying on the authorized operations by the Developer, in the Special Economic Zone;
- monitor the utilization of goods or services or warehousing or trading in the Special Economic Zone;
- approve, modify or reject proposals for setting up Units for manufacturing or rendering services or warehousing or trading in the Special Economic Zone [other than the grant of licence under section 9(2)(3)] in accordance with the provisions of section 15(8) where the Approval Committee is unable to decide whether a particular process constitutes manufacture or not, it shall refer the same to the Board of Approval for a decision
- allow, on receipt of approval under clause (c) of subsection (2) of section 9, foreign collaborations and foreign direct investments (including investments by a person outside India) for setting up a Unit;
- monitor and supervise compliance of conditions subject to which the letter of approval or permission, if any, has been granted to the Developer or entrepreneur; and
- perform such other functions as may be entrusted to it by the Central Government or the State Government concerned, as the case may be.
The Approval Committee shall not discharge such functions and exercise such powers in relation to a Developer. Till such time, the Approval Committee is constituted, the concerned Development Commissioner shall discharge all functions and exercise all powers of the Approval Committee.
Meeting of approval committee
For the purpose of exercising its powers and performing its functions, the Approval Committee may invite to its meetings, such persons as the Committee deems fit, whose assistance or advice it may consider necessary. The Approval Committee shall meet once in every fortnight on a fixed predetermined day.
Quorum of the meeting
One half of the total Members of the Approval Committee shall form a quorum.
Decision of the Committee
All the acts of the Approval Committee shall be decided by a general consensus of the Members present. In case the Approval Committee is unable to decide any matter by a general consensus, such matter shall stand referred to the Board of Approval.
No act of the Approval Committee shall be called in question on the ground merely of existence of any vacancy in, or any defect in the constitution of, the Approval Committee. All orders and decisions of the Approval Committee and all other communications issued by it shall be authenticated by the signature of the Chairperson or any other member as may be authorized by the Approval Committee in this behalf.
Setting up of unit in SEZ
Section 15 provides the procedure for setting up a unit in SEZ which is as follows-
- Any person, who intends to set up a Unit for carrying on the authorized operations in a Special Economic Zone, may submit a proposal to the Development Commissioner concerned in Form F, in five copies, with a copy to the Developer.
- The Development Commissioner shall get the proposal scrutinized and get it placed before the Approval Committee for its consideration.
- 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 as detailed below-
- the requirements (including the period for which a Unit may be set up) subject to which the Approval Committee shall approve, modify or reject any proposal;
- the terms and conditions, subject to which the Unit shall undertake the authorized operations and its obligations and entitlements.
- 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.
- The Approval Committee may also approve proposals for broad-banding, diversification, enhancement of capacity of production, change in the items of manufacture or service activity.
- The Development Commissioner may, after approval of the proposal, grant a letter of approval to the person concerned to set up a Unit and undertake such operations which the Development Commissioner may authorize and every such operation so authorized shall be mentioned in the letter of approval.
Validity of approval
- The Letter of Approval shall be valid for one year within which period the Unit shall commence production or service or trading or Free Trade and Warehousing activity and the Unit shall intimate date of commencement of production or activity to Development Commissioner.
- 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.
- 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.
- 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.
Cancellation of letter of approval
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 after giving a reasonable opportunity of being heard to the entrepreneur. The Unit shall not from the date of such cancellation, be entitled to any exemption, concession, benefit or deduction available to it, being a Unit, under this Act.
Change of entrepreneur
The Approval Committee may also approve change of the entrepreneur of an approved unit, if the incoming entrepreneur undertakes to take over the assets and liabilities of the existing Unit.
Appeal
Any person aggrieved, by an order of the Approval Committee, made under sub-section (3), may prefer an appeal to the Board within such time as may be prescribed. No appeal shall be admitted if it is preferred after the expiry of the time prescribed therefor: an appeal may be admitted after the expiry of the period prescribed therefor if the appellant satisfies the Board that he had sufficient cause for not preferring the appeal within the prescribed time. before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard.
