MNRE Asks Solar Manufacturers to List Items for Basic Customs Duty Exemption

There has been uncertainty in the industry over the effective rate of basic customs duty on solar imports since the budget announcement


Amid ongoing confusion in the solar industry over the imposition of basic customs duty, the Ministry of New and Renewable Energy (MNRE) has issued a notification asking solar PV manufacturers and associations to submit a list of machinery and capital goods which they would like to be included in Basic Customs Duty (BCD) exemption list.

The MNRE consulted with the Ministry of Finance over the issue of exemption of BCD on the import of capital goods required for setting up manufacturing units for manufacturing solar cells, modules, wafers, ingots, and polysilicon.

Through its notification dated June 30, 2017, the Department of Revenue, Ministry of Finance had stated that the exemption of payment of BCD is available for goods required for the manufacturing of goods falling under tariff head 8541.

Following the Budget 2020 presentation, the government in an amendment split the earlier tariff item 8541 40 11 (solar cells whether or not assembled in modules or panels) into two; 8541 40 11 (solar cells not assembled) and 8541 40 12 (solar cells assembled in modules or made up into panels) and proposed a basic customs duty of 20% on both the tariff items.

The MNRE notification said that though the tariff rate on these new tariff items has been increased from nil to 20% in the Union Budget 2020-21, though the effective BCD on (solar cells, not assembled) and (solar cells, assembled in modules or made up into panels), remains to be zero.

The Ministry of Finance has suggested that MNRE, in consultation with the Department of Heavy Industries (DHI), should come up with a list of machinery and capital goods which can be considered for inclusion in List 19 of the notification issued by the Department of Revenue on June 30, 2017.

Mercom reported previously that the BCD on the import of solar cells and modules will remain ‘zero’, for now. An official from the Ministry of Finance had informed Mercom that there is a basic customs duty exemption (notification 24/2005 Customs dated March 1, 2005) in place for these items. Unless the earlier notification is amended to exclude the solar cells and modules from customs duty exemption, the items will continue to have 0% duty.

There is already an existing safeguard duty on these items. The safeguard duty for solar cells and modules imported from imports from China and Malaysia from January 30, 2020, to July 29, 2020, is 15%.