Even as the SEZ Board of Approval meeting, held in New Delhi on Thursday, deferred taking a decision on Essar's request to link its steel-based zone at Hazira with its adjacent domestic tariff area unit, commerce ministry officials say the proposal may not be accepted.

According to its plans submitted for clearance to the BoA, Essar wants to operate a one-way conveyor belt to transfer hot briquetted iron produced in the SEZ to its adjacent DTA unit, where it would be processed further.

The Development Commissioner of the Kandla SEZ has been directed by the BoA to submit a report on the proposed linkage through the conveyor belt.

Commerce ministry officials say the movement of material from the SEZ to the DTA unit would lead to a lot of confusion and would be a difficult arrangement to monitor.

"Essar officials had met us regarding the proposed movement of goods from the SEZ to the DTA. This half DTA-half SEZ arrangement is not sustainable. It would be better for the company to either go for a full fledged DTA or an SEZ," they said.

Essar executives maintain that the quantity of raw material moved through the conveyor belt to the DTA unit can be monitored.