(a) Extracts from the letter of the respondents dated 8.9.93 addressed to the Secretary of Commerce (relevant portion reproduced below:

Soon after the commencement of initial production, however, teething problems started resulting in a much higher than expected level of 'rejects' besides other machinery problems causing frequent breakdowns and also the end quality of the fibre produced which was not conforming to the rigid international standards. Immediately thereafter, the Company set-out in sincere resolve to tackle the problems by consulting/engaging experts in the field not only from India but from abroad also hoping to find practical solutions to the machinery limitations etc. Despite several floor level modifications carried out as per advice of the Consultants the gravity of the quality problems cum high percentage of rejects continued unabated, as may be seen from the production statistics enclosed for the period September, 1992 to August 1993 as per Annexure-I.

As a result of above factors, we have now incurred heavy losses exceeding Rs. 805 lakhs arising out of heavy accumulation of reject inventories on the one hand and our inability to produce desired quality product for export purposes reflected at less than 15% over the past full year of production, thus posing extra-ordinary financial problems by way of blocking working capital, inventory carrying costs etc., seriously affecting our resources position i.e., liquidity.

In view of the abnormal predicament and circumstances described above and with our maximum efforts to bring the operations back to normalcy not bearing fruit, the Management is left with no other option but to approach your offices to seek debonding of the EOU operations for marketing into DTA, as the product manufactured still meets the domestic standards. Accordingly, it is prayed that the Ministry's considered recommendations granting debonding may be rushed for official clearance by the Board of Approval for necessary action. In arranging your recommendations to BoA, we appeal to your good offices to consider waiver of all/any penalties in light of the foregoing factors beyond our control. On our part, we would like to assure that immediately after the approval is afforded, we shall comply with the prescribed procedures, arrange refund of duty amounts on C G imports and concessions availed under the EOU Scheme through the authorities concerned. Meanwhile, pending the formal debonding clearance through GOI, in view of the serious ways and means position arising out of huge build-up of inventories exceeding 2650 MT (approximate value Rs. 12 Crores), we request you as a very special case, Government may kindly allow us to sell above quantities to DTA after payment of eligible duties as this would provide the much needed relief to our liquidity problems.

(c) Extract from the letter of the Govt. of India, Ministry of Commerce, dated 18.10.93 regarding debonding (relevant portion reproduced below)

I am directed to refer to your letter dated 18th October, 93 on the above subject and to say that your request for debonding of your Unit was considered by the BOA for 100% EOUs in its meeting for 7.10.93 and has been recommended for approval subject to normal conditions of debonding (Annexure). Formal letter would be issued by SIA in due course.

2. As requested by you, this letter is being issued to enable you to workout various modalities with the Customs Authorities and others for switch-over from EOU to DTA and to enable you to obtain