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C/SCA/17013/2018 JUDGMENT

4. Opposing the petition, Mr. Parth Bhatt, learned senior standing counsel for the respondents, submitted that rule 18 of the Special Economic Zone Rules, 2006 (hereinafter referred to as "the SEZ Rules") bars setting up of any new unit for recycling of plastic waste as well as recycling of used clothing under rules 18(4)(a) and 18(4)(c) of the rules. However, the proviso to the said rules empowers the Board of Approval, an inter-ministerial body constituted under section 8 of the SEZ Act, to decide the extension of validity of Letter of Approval granted to such units.

C/SCA/17013/2018 JUDGMENT Accordingly, only those plastic scrap recycling units which existed prior to the inception of SEZ Rules, 2006, were allowed to continue and it was decided that no new unit of plastic waste and scrap recycling will be allowed in SEZs. The intention of the policy was to phase out these units of plastic waste and scrap recycling which could have negative impact on the environment. Further, as per Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, the import of solid plastic waste i.e. the raw material used by the plastic recycling units has been banned in Domestic Tariff Area. These units being in SEZ are exempted. However, the business model of these units have adverse effect on environment.

13. It is the case of the respondents that rule 18 of the SEZ Rules bars setting up of any new unit for recycling of plastic waste. However, the proviso thereto empowers the Board of Approval, an inter-ministerial body constituted under section 8 of the SEZ Act to decide the extension of validity of Letter of Approval granted to such units. It is also the case of the respondents that there is a ban on setting up of any new units for recycling of both plastic and used clothing after the coming into force of the SEZ Act and rules since 10.2.2006. The import of plastic scrap was always under the restricted category since 1998 due to environmental concerns. It appears to be the case of the respondent Board that the policy of the Central Government of phasing out plastic unit can be culled out from sub-rule (4) of rule 18 of the SEZ Rules as there is a ban on setting up of new units. In the opinion of this court, no such policy can be gathered from sub-rule (4) of rule 18 of the SEZ Rules. The only policy embedded in the sub-rule is a policy not to permit new units for recycling of scrap being set up and that is how the Board has been reading the sub-rule till date by granting extension of Letter of Approval by exercising the powers vested in it under the proviso. It is only in the case of the petitioners that the Board has read into rule 18(4) a policy C/SCA/17013/2018 JUDGMENT to phase out recycling of plastic scrap.