Policy on units in SEZs carrying on recycling of plastic scrap or waste - SEZ - No. C.6/10/2009-SEZ

No. C.6/10/2009-SEZ Government of India Ministry of Commerce Industry Department of Commerce (SEZ Division) Udyog Bhawan, New Delhi Dated: I7th September, 2013 Subject: Policy on units in SEZs carrying on recycling of plastic scrap or waste. 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 recycling of plastic scrap or waste. (i) Conditions for import of plastic waste/scrap: Import of plastic waste/scrap shall be permitted only as per the approved capacity of the Letter of Approval issued to a SEZ unit. Further the type of plastic waste/scrap allowed for import for such units in SEZs would be restricted to such type of scrap for which they have the necessary plant and machinery installed for reprocessing within their approved capacity in the Letter of Approval issued to them. (ii) Description of Plastic Scrap : The description/definition of the plastic waste/scrap for this purpose would be: "Plastic scrap/ waste constitute those fractions of plastics generated by various plastic processing operations or those fractions generated in the production process of plastics in a plant, which have not been put to any use whatsoever and as such can be termed as virgin or new material which can be recycled into viable commercial products using standard plastic processing techniques but without involving any process of cleaning, whereby effluents are generated." Such virgin/ new Plastic scrap/waste shall be permitted for import in the following forms i.e. compressed, films in cut condition, cut tape soft waste, flakes, powders, pieces of irregular shape. However, PET bottle waste/scrap shall continue to be freely importable as hitherto. Any other category of plastic scrap/waste not covered by the description/definition as above shall not ordinarily be permitted for import into SEZ. (iii) Procedure to be followed for verification of documents prior to clearing the consignment in SEZ - Each consignment of plastic waste/scrap imported by unit shall be accompanied with a certificate from the factory in which it was generated to the effect that it conforms to the description/definition as given in sub-paragraph (ii) above. The importer of the plastic waste/scrap would also be required to furnish a declaration to the Development Commissioner at the time of clearance of goods, certifying that the plastic waste/scrap imported by him and for which clearance is being sought, strictly conforms to the description/definition as given in sub-paragraph (ii) above and that it is free from any kind of toxic/non- toxic contamination and has not been put to any previous use, whatsoever. (iv) As per the Water (Prevention Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981, plastic processing units are required to obtain Consent to Establish and Consent to Operate from the State Pollution Control Board concerned. (v) In case of mis-declaration regarding the material being free from any toxic/hazardous substances by the importer, action as per laws of Ministry of Environment Forests applicable under the Environment (Protection) Act, 1986 for committing offences leading to damage of environment and increase in pollution in the country, as modified and in force from time to time, would be taken by the competent authority. (vi) As per the Hazardous Waste (Measurement, Handling and Trans-boundary Movement) Rules, 2008, solid plastic waste can be imported into the country only with the permission of the Ministry of Environment and Forests as it is listed in Schedule III (Part B) of the aforesaid rules. All plastic processing units are required to conform to the said Rules. (vii) Before the clearance of the plastic waste/scrap, all imported consignments of such plastic waste/scrap shall be subjected to scrutiny and testing of samples. SEZ/Customs authorities shall for this purpose draw a sample and send the same to the nearest laboratory/office of the Central Institute of Plastic Engineering Technology (CIPET) or Central Revenue Control Laboratory with a view to having the same analysed and verified that such imported consignments are in conformity with the description/definition as given in sub-paragraph(ii) above. (viii) For any other mis-declaration, 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. (ix) The units are required to fulfill the export obligation criteria including positive Net Foreign Exchange (NFE) earnings as provided in Rule 53 of SEZ Rules, 2006 , per provisions of this Policy. No broad banding of unrelated products shall be allowed for this purpose. (x) To ensure that plastic reprocessing units in SEZ fulfill their export obligations, in addition to meeting their NFE obligation, all such units would be required to ensure that certain minimum percentage of the unit's annual turnover is physically exported out of the country. The minimum physical export levels to be achieved by such a unit on a graduated upward scale, as a percentage of the unit's total turnover is prescribed as under : Period Minimum Physical Export Obligation At the end of 2nd year Not less than 40% of the total annual turnover At the end of 4th year Not less than 80% of the total annual turnover At the end of 5th year 100% of the total annual turnover The unit will be required to continue to physically export 100% of their annual turnover, thereafter. (xi) 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 plastic scrap or waste (xii) Compliance with parameters for import of plastic waste/scrap 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 Letter of Approval (LoA) renewal cases etc., relating to units in SEZs carrying on recycling of plastic scrap or waste. (xiii) The validity of LoAs of existing units in SEZs carrying on recycling of plastic scrap or waste would henceforth be governed by the provisions of this policy and would be appropriately amended / renewed as per the terms of this policy. (xiv) As provided under Rule 53 of the SEZ Rules if a Unit does not achieve positive NFE Earning or fails to abide by any of the terms and conditions of the LoA or Bond-cum-Legal Undertaking, without prejudice to the action that may be taken under any other law for the time being in force, the said Unit shall be liable for penal action under the provisions of the Foreign Trade (Development and Regulation) Act, 1992 as well as liable for cancellation of its LoA as per provisions of the SEZ Act. (xv) This Policy would supersede all instructions /circulars issued earlier in this regard on this subject. This has the approval of Hon'ble Minister for Commerce Industry. (Sanjeet Singh) Director Tel. 2306 2109 Fax: 2306 3418 e-mail; [email protected] To: 1. Chief Secretaries of all States/UTs 2. All Development Commissioners of SEZs 3. Department of Revenue (CBDT/CBEC), Govt. of India 4. Department of Chemicals Petro-Chemicals 5. Ministry of Environment Forests 6. Director General, DGFT 7. DG, EPCES