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2021 (9) TMI 151 - HC - CustomsConstitutional validity of Rules 53 and 80 of the Special Economic Zone Rules, 2006 - rule was inserted by way of Clauses 28 and 33 of the Special Economic Zone (Amendment) Rules, 2018 dated 21.09.2018 - requirement of furnishing a Bank Guarantee of an amount equivalent to the penalty - HELD THAT - It is undisputed that Petitioner has furnished the Bank Guarantee equivalent to the amount of the penalty i.e. for ₹ 10,07,42,260/- and the same is valid upto 07.09.2021. In terms of the Rule Position, there is a requirement of furnishing a Bank Guarantee of an amount equivalent to the penalty sought to be imposed - Learned Senior counsel for the Petitioner, on instructions, undertakes that the validity of the Bank Guarantee shall be extended for a further period of two years from 07.09.2021. An affidavit of undertaking to this effect shall be filed by the Petitioner within a period of 15 days from today enclosing therewith a photocopy of the extended Bank Guarantee valid upto 06.09.2023. Subject to the Petitioner extending the Bank Guarantee as aforesaid and filing an affidavit of undertaking, within the time granted by this Court, Respondents shall process the application of the Petitioner seeking exit from SEZ under Rule 74 of SEZ Rules - Petition disposed off.
Issues:
Challenge to Rules 53 and 80 of the Special Economic Zone Rules, 2006 as ultra vires the Constitution of India and SEZ Act, 2005. Validity of Bank Guarantee for exit from SEZ under Rule 74 of SEZ Rules. Analysis: The petition challenges the validity of Rules 53 and 80 of the SEZ Rules, inserted through the Special Economic Zone (Amendment) Rules, 2018, as ultra vires the Constitution of India and the SEZ Act, 2005. Rule 53 excludes foreign exchange earnings on trading of goods to customers in the Domestic Tariff Area from the computation of Net Foreign Exchange, while Rule 80 imposes a mandatory default amount for alleged shortfalls, contested to be beyond the provisions of the FTDR Act. The petitioner contests a penalty imposed and seeks de-linking of the penalty dispute from the exit process, having furnished a Bank Guarantee as per Rule requirements. The respondents argue for the necessity of a Bank Guarantee and a stay order from the Competent Authority for exit consideration under Rule 74 of SEZ Rules. The Court acknowledges the Bank Guarantee furnished by the petitioner, valid until a specified date, equivalent to the penalty amount. The petitioner undertakes to extend the Bank Guarantee's validity for an additional two years, filing an affidavit of undertaking within 15 days. Subject to this extension and filing, the respondents are directed to process the petitioner's exit application under Rule 74 of SEZ Rules. The Court clarifies that the penalty imposed should not obstruct the exit application's consideration, emphasizing that the decision must align with the law and the Court's observations, urging an expeditious resolution. In conclusion, the judgment addresses the challenge to specific SEZ Rules' validity, emphasizing compliance with Rule provisions for exit from the SEZ. The Court ensures the petitioner's Bank Guarantee extension, enabling the exit application's processing by the respondents without hindrance from the contested penalty, stressing the decision's adherence to legal requirements and prompt resolution.
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