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4. Learned senior advocate, Mr. Percy Kavina, has put in appearance on behalf of the petitioners while learned advocate, Mr.Devang Vays and Mr.Parth Bhatt have appeared for the respondents.

5. Mr.Kavina, learned senior counsel has argued that the definition of "exports" is given in Section 2(m) of the Act, which does not say "exports", export means physical export out of India. Rule 53 of SEZ Rules, 2006, provide various transactions of SEZ units against payment of foreign exchange as exports. Rule 19(6) says that SEZ unit has only one obligation that is at the end of block period of 5 years the unit should remain positive, when their NFEE is cumulatively monitored. Section 30 of the Act read with Rule 47 to 49 says that a unit in SEZ can make DTA clearances on payment of applicable duties without any limits so long as they are positive in NFEE. In the entire SEZ Act / Rules, there is no any condition which can compel the SEZ units to make export physically out of India. Therefore, the impugned order i.e. policy dated 17.9.2013 and the letter dated 30.1.2014 of the respondents are unreasonable, arbitrary, irrational and illegal without authority of law. Since the same have seriously impelled the activities of the petitioners and are violative of Article, 14, 19 (1) (g), 265 and 300-A of the Constitution of India. Vide Notification dated 30th March, 2006 issued by DGFT, the worn clothing units in SEZ HC-NIC Page 5 of 24 Created On Wed Feb 15 02:52:11 IST 2017 were permitted to clear their un-mutilated clothing as export surplus and the export rejects to the extent of 15% of CIF value of imports made in the previous year. Vide notification dated 19.5.2010, the worn clothing units are debarred from clearance of 15% of the import of worn clothing in DTA. The Notification is not retrospective and therefore, imports made after 19.5.2010 will not be eligible to avail the benefits of the notification dated 30th March, 2006. But the fact remains that worn clothing unit in SEZ should be eligible for clearance of 15% of the un-mutilated worn clothing in India on applicable duties to the extent of 15% of CIF value of imports made in the previous year. Thus, the petitioners are entitled for the past accrued entitlement of 15% of CIF value of imports at least for imports made for a period upto 19.5.2010. If the past accrued entitlement which was legally available to the petitioners is not allowed by the respondents, it will be promissory estoppal on the part of the Government. There are number of varieties of units for e.g. ready-made garments, cosmetics, engineering, pharmaceuticals, perfume products, agarbatties and wax-candle etc. in SEZ, which are governed by the provisions of SEZ Act / Rules including worn clothing units. But the respondents have formulated the policy dated 17.9.2013, (impugned order) imposing various restrictions on worn clothing units only, this is discriminatory. It will be necessary to point out here that Government has issued similar notification regarding plastic industry in SEZ, however, which was challenged by other writ petitions pending before coordinate Bench. I have been informed that the said writ petitions have been allowed and the notification issued by SEZ has been quashed and set aside. However, the petitions in hand can be independently disposed of without making HC-NIC Page 6 of 24 Created On Wed Feb 15 02:52:11 IST 2017 any further reference to such decision.

14. Learned counsel further argued that the policy dated 17.9.2013 is inconsistent with the current provision of the SEZ Act / Rules. It has been argued that imposition of conditions of physical export of 100% to be achieved in slab as provided under Section 2(m) of the Act which defines "export" which includes not only physical export but also other modes. Definition of export is given in Section 2(m) of the Act and further as per Rule 53 (deemed exports) are also considered "export" for discharge of export obligation. Under Section 2(m)(i) "export means HC-NIC Page 12 of 24 Created On Wed Feb 15 02:52:11 IST 2017 taking goods, or providing services, out of India, from a Special Economic Zone, by land, sea or air or by any other mode, whether physical or otherwise". Imposition of extra conditions in policy dated 17.9.2013 for achieving the minimum upward level in physical export out of India to extent of 40% at the end of second year, 80% at the end of fourth year and 100% at the end of 5th year and thereafter, 100% every year, is inconsistent with the provisions of Section 2(m) of the SEZ Act and Rule 53 of SEZ Rules and since Central Government has not prescribed such conditions, the same cannot be imposed indirectly, as no new conditions can be imposed under the existing units and no new terms and conditions can be prescribed by the BOA for the existing units.

18. On law points, learned counsel for the petitioners argued that the Competent Authority cannot issue order / office memorandum, instructions in contravention to the statutory rules. It can only be issued to supplement the statutory rules but not to supplant it. In the present case, the authority has issued policy which is inconsistent with the provisions of SEZ Act and Rules, when the administrative instructions are not in conformity with the statutory rules then it is invalid. According to him, in the present case, the instructions by way of policy are against provisions of SEZ Act and Rules.

HC-NIC Page 14 of 24 Created On Wed Feb 15 02:52:11 IST 2017 Specifically, the imposition of conditions regarding physical export out of India in slab basis is absolutely dehors the Act and Rules. Notification / Policy cannot enlarge or amend the scope of substantive provisions of the parent Act. It can be done only by amending the statute if the legislature is competent to take subject matter. That even the imposition of new condition is required to be amended by the legislature itself and therefore, the policy of the Government cannot amend the Act itself and therefore, the conditions cannot be imposed by way of policy as it is against the law. That the administrative instructions are issued without following procedure prescribed against the provisions of SEZ Act and SEZ rules. It has been argued in the present case, that Notification / policy are administrative instructions only and it cannot be enforced without due process of law and it has no force of law. The BOA has no power to impose such condition directly without framing adequate rules. The BOA can impose only those conditions which are prescribed in the Act and or the Rules and in absence of that, the Board does not have any independent right to frame new conditions which are in contravention with the provisions of the Act and the Rules. In support of these arguments, learned counsel has relied upon following judgments.