Draft Guidelines to regulate functioning of worn and used clothing units in SEZs - SEZ - No. D.6/35/2012-SEZ

No. D.6/35/2012-SEZ Government of India Ministry of Commerce Industry Department of Commerce SEZ Division Udyog Bhawan, New Delhi Dated. 3 rd April, 2013 To: 1. All Ministry/Department of Government of India 2. All Chief Secretaries of State Government 3. All Zonal DCs 4. EPCES Subject: Draft Guidelines to regulate functioning of worn and used clothing units in SEZs- regarding. Sir/Madam, I am directed to circulate a "Draft guidelines to regulate functioning of worn and used clothing units in SEZs" and invite comments/suggestions on the same in order to finalize the Policy to regulate functioning of worn and used clothing units in SEZs. 2. It is requested that your comments on the draft policy may kindly be sent to this office within 15 days. Encl. As above Yours faithfully, (Sanjeet Singh) Director Tel. 011-2306 2109 E-mail: sanjeet@nic.in Website- sezindia.gov.in No. D.6/35/2012-SEZ Government of India Ministry of Commerce Industry Department of Commerce (SEZ Division) Udyog Bhawan, New Delhi Dated: 3 rd April, 2013 Subject: Guidelines to regulate functioning of Worn and Used clothing units in SEZs - regarding In terms of Section 5 of the SEZ Act, 2005 , the main objectives of the SEZ scheme are: (i) generation of additional economic activity (ii) promotion of exports of goods and services (iii) promotion of investment from domestic and foreign sources (iv) creation of employment opportunities (v) development of infrastructure facilities The SEZs being set up under the SEZ Act, 2005 and the units being established therein are established towards the achievement of the above objectives. This yardstick applies equally to the plastics recycling units set up in SEZs. The matrix of fiscal benefits, duty concessions as well as obligations envisaged in the SEZ Act, 2005 and Rules framed thereunder are equally applicable to the units in SEZs carrying on recycling of plastic scrap or waste. Additional safeguards in respect of plastics recycling units have been provided by Rule 18(4) of the SEZ Rules, 2006 , which states no proposal shall be considered for:- (a) Recycling of plastic scrap or waste: Provided that extension of Letter of Approval for an existing Unit shall be decided by the Board; (b) Enhancement of the approved import quantum of plastic waste and scrap beyond the average annual import quantum of the unit since its commencement of operation to the existing Units; (c) Reprocessing of garments or used clothing or secondary textiles materials and other recyclable textile materials into clipping or rags or industrial wipers or shoddy wool or yarn or blankets or shawls: Provided that extension of Letter of Approval for an existing Unit shall be decided by the Board" Keeping in view the aforesaid provisions of the SEZ Act and Rules and inputs received from the various stakeholders, the following policy is being prescribed to be followed by the units in SEZs carrying on reprocessing/recycling of used clothing. (i) Procedure to be followed for verification of documents prior to clearing the consignment in SEZ - Each consignment of used clothing imported by unit shall be accompanied with a certificate from the exporter/agency in which it was generated regarding dis-infection and fumigation of the containers from an agency licensed in the state of origin of worn clothing along with import documents. (ii) In case of mis-declaration regarding the material being free from any toxic/hazardous substances by the importer, action as per laws formulated by the Directorate General of Foreign Trade, as in force from time to time, would also apply and action as per Foreign Trade (Development Regulation) Act, 1992 , shall be taken by the competent authority. The units should fulfil the export obligation criteria including NFE as per provisions of this Policy by physically exporting of the used clothing and those products which are made out of imported used clothing. No broad banding of unrelated products shall be allowed for this purpose. (iv) To ensure that used clothing units in SEZ fulfil their export obligations, the sale to domestic tariff area (DTA) by such units will be restricted to 50% of the FOB value of the goods physically exported by the SEZ unit, computed on an annual basis and would include sales made to DTA under Rule 53A of the SEZ Rules, 2006 , directly or indirectly. Further the sales to DTA of un-mutilated clothing on account of export surplus or export rejects will not exceed 15% of the value of exports of the unit. (v) All such units would be required to ensure that after a period of 6 years from the issuance of LOP under this policy hundred percent of the production of such units is physical exported out of the country. No part of the production would be permitted to be sold in the Domestic Tariff Area after a period of 6 years. (vi) All applicable laws, rules, regulations etc., pertaining to environmental and other areas, as amended from time to time, shall be strictly complied with by all units in SEZs carrying on recycling of used clothing. In particular General Environmental Standard as per Rule 3 of Environment (P) Rules, 1986 (Schedule IV) will be applicable to all such units. (vii) Before the clearance of the used clothes to DTA, all imported consignments of such used clothes shall be subject to 100% scrutiny at the premises of the unit by SEZ/Customs authorities. (viii) Compliance with parameters for import of used clothing and other regulatory requirements as specified in this instruction and applicable through various legal provisions, as amended from time to time shall be kept in view by the Board of Approval while considering LoA renewal cases etc., relating to units in SEZs carrying on recycling of used clothing. (ix) This Policy would supersede all instructions /circulars issued earlier in this regard on this subject. The validity of LOAs of existing units in SEZs carrying on recycling of used clothing would henceforth be governed by the provisions of this policy and would be appropriately amended / renewed as per the terms of this policy. (x) The matter relating to setting up of new used clothing units may be considered only after the mechanism being proposed for the existing units is implemented and reviewed at a future date for its efficacy.