Orissa High Court Issues Temporary Stay on Levy of Safeguard Duty on Solar Imports

The recommendation made by the Directorate General of Trade Remedies (DGTR)  to impose a 25 percent safeguard duty on solar imports has displeased both developers and manufacturers for different reasons.

Last week, the DGTR recommended a 25 percent safeguard duty on solar cell and module imports from China and Malaysia for the first year, followed by a phased down approach for the 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. DGTR has recommended no duty will be levied on companies from other developing countries. DGTR made these recommendations after examination and analysis of submissions by interested parties.

Soon after the recommendation was made, the Solar Power Developers Association (SPDA) wrote to the commerce ministry seeking complete exemption of the duty for projects currently under development.

And now, one of the  country’s leading renewable project developer, ACME Solar, has received a stay order from the Orissa high court for the imposition of safeguard duty according to a source close to the case. The court has directed the government not to issue any notification regarding Safeguard Duty until August 20, 2018. The court is yet to issue the order copy.



According to protocol, the recommendation of DGTR to impose a 25 percent safeguard duty was to be sent to the board of secretaries consisting of officials from MNRE, Ministry of Power, Ministry of Commerce, Department of Industrial Policy & Promotion, Revenue, Labor and Agriculture. These secretaries were to evaluate the recommendation and decide whether it is to be imposed, not imposed or imposed up to a certain percentage lower or higher than 25 percent. Their evaluation was to be then sent to the Ministry of Finance, which would then make the  final decision and issue a gazette (official notification) to implement the recommendation of the board of secretaries.

With this stay order, it looks like the board of secretaries will have to withhold their notification of any recommendation to the Ministry of Finance until August 20, 2018.

This development is reminiscent of the earlier stay order passed by the Madras High Court in January 2018. The Madras High Court had put a temporary stay on the recommendation to levy a 70 percent safeguard duty on the import of solar components to India after listening to a petition filed by project developer Shapoorji Pallonji, which requested that the court intervene in the matter.

Solar project developers in the country are not in favor of imposing duties on imported solar components while domestic manufacturers support an aggressive safeguard duty on imported cells and modules.

This move by the court is just a pause for now and delays the final decision unless there is more litigation to come.