SEZ policy limits on DTA entitlement cannot override vested benefits or add new export conditions retrospectively.

Executive policy under the SEZ framework cannot add new physical export conditions or curtail existing DTA sale entitlement unless the Act or Rules expressly permit it. The text states that the Gujarat HC treated the 17.9.2013 policy and the 30.1.2014 letter as beyond executive authority because they introduced phased physical export requirements and restricted sale of worn clothing without a corresponding rule amendment. It also records that accrued 15% DTA entitlement earned before 19.5.2010 was treated as a vested benefit that could not be withdrawn retrospectively, with promissory estoppel and timely assertion supporting the claim.

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Issues: (i) Whether the policy dated 17.9.2013 and the consequential letter dated 30.1.2014 could impose additional physical export conditions and withdraw the existing 15% DTA entitlement for worn clothing units in SEZ. (ii) Whether the petitioners were entitled to the past accrued DTA entitlement of 15% in respect of imports made prior to 19.5.2010 and the unutilized entitlement as on 19.5.2010.

Issue (i): Whether the policy dated 17.9.2013 and the consequential letter dated 30.1.2014 could impose additional physical export conditions and withdraw the existing 15% DTA entitlement for worn clothing units in SEZ.

Analysis: The statutory scheme under the SEZ Act and Rules treats export as including physical as well as deemed export, and the units' obligation is to maintain positive net foreign exchange earnings over the prescribed block period. The Court found that the impugned policy introduced new obligations requiring phased physical exports and restricted DTA sale of un-mutilated worn clothing without any corresponding amendment to the statutory rules. It held that executive policy could not override or supplant the Act and Rules, and that such conditions were beyond the authority of the respondents.

Conclusion: The impugned policy dated 17.9.2013 and the letter dated 30.1.2014 were held unsustainable and were quashed.

Issue (ii): Whether the petitioners were entitled to the past accrued DTA entitlement of 15% in respect of imports made prior to 19.5.2010 and the unutilized entitlement as on 19.5.2010.

Analysis: The earlier notification had conferred a benefit linked to imports made in the previous year, and the subsequent deletion was treated as prospective. The Court held that accrued benefits already earned before withdrawal could not be taken away retrospectively. It also held that the petitioners had made timely representations and that the claim was not barred by delay. The Court further held that promissory estoppel applied, as the accrued entitlement had been withdrawn after it had already arisen under the earlier regime.

Conclusion: The petitioners were held entitled to clear their past accrued DTA entitlement at 15% of CIF value for imports made prior to 19.5.2010 and the unutilized entitlement as on 19.5.2010.

Final Conclusion: The petitions were allowed, the impugned SEZ policy conditions were struck down, and the respondents were directed to extend the accrued DTA benefit to the petitioners in accordance with the earlier entitlement.

Ratio Decidendi: Administrative policy cannot impose new substantive conditions or retrospectively divest vested statutory entitlements unless the governing statute or valid rules expressly authorize such withdrawal.

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