Disciplinary proceedings are governed by the principles of natural justice whereunder an employee has a right to know his alleged misconduct and to participate in the inquiry. Since a chargesheet and show-cause notice provide such rights to an employee, actual service of these documents on the employee is vital to validate the disciplinary proceedings. In cases where a charge sheet was sent to an employee by registered post only once and was returned undelivered with the postal endorsement indicating unavailability of the employee at the address, courts have held that the chargesheet cannot legally be said to have been served.

However, it is also possible that after the employee absents himself, he may intentionally evade service of the chargesheet and the show-cause notice to avoid disciplinary proceedings. Employers may in any case proceed ex-parte provided they make their best efforts to serve the chargesheet and the show-cause notice on the employee. You should, therefore, before proceeding ex-parte, make additional efforts to serve these documents on your employee (i) by personal service (through any other employee), (ii) by two to three more registered postal services at the residential and permanent address of the employee, and (iii) by publication of the show-cause notice and specific charges in a newspaper having wide local circulation and readership in the area the employee resides. In case of personal service, ensure that written acknowledgement of receipt is obtained from the employee and if he refuses to acknowledge, such facts should be immediately mentioned on a copy of the chargesheet and signed by the witnesses.

Could you please advise what would be more advantageous to set up, between an EOU and a SEZ unit, to manufacture and export soft toys from India?
On comparing regulations applicable and exemptions available to export oriented units (EOUs) and units set up in special economic zones (SEZ units) for manufacturing and exporting toys under the Export and Import Policy 2002-07 (EXIM Policy) and Income Tax Act, 1961, SEZ units appear as a better option.

The exim Policy provides several advantages to sez units over eous. While no minimum export performance is prescribed for sez units, eous require a minimum export performance up to US$0.5 million or three times the cif value of imported capital goods, whichever is higher. On payment of applicable customs and excise duties, sez units can sell unlimited value of products in the Indian Domestic Tariff Area, while eous, even on payment of such duties, can sell products only up to 50 per cent of the fob value of export, provided minimum net foreign exchange earning as percentage of export is achieved. sez units also have the leverage to utilise imported goods (except capital goods) within a period of five years, as against two years prescribed for eous. The administration of sez units is also considered easier as compared to eous due to relatively simplified procedures for record keeping, inter-unit transfers, sub-contracting, duty-free imports and disposal of obsolete material, waste and scrap.

Under the Income Tax Act, sez units commencing production during the year 2002-03 may avail deduction of entire export profits from income till the assessment year 2007-08 and 50 per cent of the export profits during the assessment years 2008-09 and 2009-10. eous commencing production during the same period are only eligible for deduction of 90 per cent of their export profits from income till assessment year 2009-10.

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