Biomemtic gel isn't banned, it is a controlled substance. Bashir, as a research physician, is clearly allowed to possess and use the gel. It's illegal for him to sell it or give it away, and without knowledge of where
the gel was going to end up, Bashir wanted the order in writing so that his
ass wasn't on the line if it ended up in an explosive or something. He wanted Sisko to be at fault if the gel ended up in the wrong hands (which it was going to anyway).