Madras High Court Asks Customs to Clear Solar Modules Without Paying Safeguard Duty

Following the Orissa High Court order to stay the notification on the safeguard duty, the Madras High Court has now instructed customs officials at the Chennai port to provisionally release the module shipment of Shapoorji Pallonji Infrastructure Capital without paying the safeguard duty, according to a copy of the order seen by Mercom.

However, the court has asked customs authorities to make a provisional assessment of the safeguard duty payable in the event of upholding the notification and company to furnish a bond. The Madras High Court was responding to a petition filed by Shapoorji Pallonji to clear its goods without requiring the company to pay the safeguard duty.

The court noted that the notification issued by the Finance Ministry on July 30, 2018 imposing the safeguard duty is already under challenge. It observed that there was an interim order passed by the Orissa High Court on July 23, 2018, asking the Indian government to not issue any notification on the safeguard duty until the next hearing date of August 20, 2018.

The Madras High Court said it was aware of the Orissa High Court hearing on August 9, 2018 and the petition filed by Hero Future Energies, ACME, and Vikram Solar against the Directorate General of Trade Remedies (DGTR).



The Orissa High Court has directed the government to withdraw the notification by August 13, 2018 with the next hearing scheduled for August 14, 2018.

In light of the above observations, the Madras High court found a prima facie case to grant relief to the petitioner (Shapoorji Pallonji). The matter will be heard again on September 3, 2018.

“The Ministry of Finance imposed the safeguard duty quickly without acknowledging the Orissa Court order and now the Madras High Court has joined the fray. The Ministry of Finance needs to issue an official clarification immediately, without which there is a question of legality and more court cases will follow,” said Raj Prabhu, CEO of Mercom Capital Group.

Recap of the Case

Recently, the Ministry of Finance announced the levy of a 25 percent safeguard duty based on the final recommendations proposed by the DGTR. The duty took effect on July 30, 2018.

The ministry levied the duty despite an Orissa High Court order that put a stay on the implementation of the safeguard duty on solar modules and cells. ACME Solar had filed a petition after the DGTR recommendations and received the stay order from the court. The court had then directed the government not to issue any notification regarding the safeguard duty until August 20, 2018

However, after the sudden imposition of the duty, Hero Future Energies, ACME Solar and Vikram Solar filed new petitions in the Orissa High Court opposing it.

Mercom recently reported that the MNRE had also written to the Finance Ministry requesting that any project already under construction be exempt from the safeguard duty. The ministry has not yet issued any notifications responding to this request.

Image credit: By Yoga Balaji (File:Chennai High Court.jpg) [CC BY-SA 3.0], via Wikimedia Commons