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Madras High Court allows solar import release without paying safeguard duty

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ET Energy World
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In a new twist to the imposition of safeguard duty on imported solar panels and modules from July 30, the Madras High Court permitted Shapoorji Pallonji Infrastructure to get its consignment of panels from overseas released by customs officials at Chennai port without paying the duty.

The company has been asked to execute a bond for the amount due and will have to pay the duty if the notification imposing the levy is upheld.

Shapoorji Pallonji had moved the court seeking to quash the demand by customs for payment of safeguard duty on its consignment. The company said the notification was “illegal and arbitrary” since there was an interim order of the Odisha high court restraining the passing of any notification on the matter.

“The petitioner has made out a prima facie case for the grant of an interim order for release of the goods without paying the safeguard duty,” the high court said in an order seen by ET. “We direct the third respondent (Deputy Commissioner of Customs, Chennai) to assess provisionally the safeguard duty payable by the petitioner… and release the goods without insisting on payment of safeguard duty on executing a bond by an authorised officer of the company.”

In mid-July, the Directorate General of Trade Remedies (DGTR) had recommended imposing safeguard duty of 25% on solar panels and modules imported from China and Malaysia for a year, followed by 20% duty for the next six months and 15% duty for another six. The DGTR said the step was needed to protect the domestic solar manufacturing industry. About 90% of the solar panels and modules used in Indian projects are imported from China and Malaysia since locally made equipment is significantly costlier.

Project developer Acme Solar approached the Odisha high court challenging the decision and the court stayed notification of the duty until it had ruled on the matter. The next hearing in the case is scheduled for August 14. However, the finance ministry notified the DGTR’s recommendation on July 30.

The Madras high court made it clear in its order dated August 10 that Shapoorji Pallonji would have to pay the duty if the Odisha high court upheld the notification.

“In the event of upholding the notification, the petitioner is liable to pay the safeguard duty provisionally assessed by the authority,” the court said.

The company has more than 400 MW of solar projects, including those under construction, according to its website.

The Indian Solar Manufacturers Association had complained to the Director General of Safeguards last December against the rapidly growing imports of solar equipment, which they claimed were crippling their businesses.

Solar project developers and the Ministry of New and Renewable Energy argued that a safeguard duty could potentially put the brakes on India’s ambitious programme of setting up 100,000 MW of solar capacity by 2022 because it would lead to an increase in costs and thereby raise tariffs.

Author: Sustainability Outlook Desk