India’s Safeguard Duty Investigation Draws Criticism at WTO

The Gujarat High Court has provided temporary relief to project developer Azure Power in the matter of levy of safeguard duty on solar cells and modules imported by the company. The final hearing is scheduled for January 23, 2019.

Azure Power had submitted its petition to the Gujarat High Court arguing that for the purpose of protecting about 3 percent of the domestic demand, the rest of the importers should not be subjected to safeguard duty. According to Azure Power, the capacity utilization of the domestic industry is 85 percent, therefore they cannot claim to be injured due to imports.

In its order, the Gujarat High Court directed the Principal Commissioner of Customs to assess the provisional safeguard duty payable by Azure Power relating to bills of entries for import of solar cells and modules in accordance with Section 18 of the Customs Act and to release the goods without insisting on the payment of safeguard duty on executing a bond.

The bench has directed that the bond will be executed by an authorized officer of Azure Power. In its order, the Gujarat High Court has also specified that if the Principal Commissioner of Customs after reassessment insists on the payment of safeguard duty for the released cells and modules, Azure Power will have to pay the safeguard duty provisionally assessed by the authority.

The petition was submitted by Azure Power Thirty Three Private Limited, an entity operating under Azure Power.

This is a case specific order and does not apply to all firms that have imported solar cells and modules.

Last year, the Directorate General of Trade Remedies (DGTR) had recommended levy of 25 percent safeguard duty on solar cell imports from China and Malaysia for the first year, followed by a phased down approach for a second year. In the first six months of the second year, a safeguard duty of 20 percent will be payable by exporters to India and in the latter half of the second year, exporters will pay a safeguard duty of 15 percent.

Later, the government issued an order stating that the safeguard duty of 25 percent on solar modules and cells will be effective from July 30, 2018.

Initially, it was a popular sentiment that all the Indian manufacturers would benefit from this move. However, later the authorities specified that solar module and cell manufacturers in India who are operating in special economic zones (SEZs) will not benefit from the levy of 25 percent safeguard duty on solar imports, which was a setback for many manufacturers.