Orissa High Court Asks Ministry of Finance to Withdraw its Solar Safeguard Duty Notification

Court directs the notification to be withdrawn by August 13th an the next hearing is scheduled for August 14th


Weeks after the announcement of safeguard duty imposition on solar imports from China and Malaysia, the Orissa High Court today heard the petition filed by Hero Future Energies, ACME, and Vikram Solar against the Directorate General of Trade Remedies (DGTR).

Noting that the safeguard duty notification was issued by the ministry despite the court’s stay order on any further notifications until August 20, the bench has directed it to withdraw the notification for now.

Confirming this to Mercom, a Hero Future Energies official said, “The Orissa High Court has directed the ministry of finance to withdraw the safeguard duty notification by August 13, 2018 as the court had issued a stay order until August 20, 2018 and the notification is against the order. The court has scheduled hearing for August 14th again for the case with all the petitioners and follow up on the withdrawal by the ministry.”

“We have requested the Hon’ble Court to direct Ministry of Finance to clarify applicability of safeguard duty on SEZ units and direct EPC contracts which have already been awarded to be exempted from safeguard duty. We are hoping that we will get suitable relief from the Hon’ble court,” said Mercom’s source at Vikram Solar.

Recap of the Case

Recently, the Ministry of Finance announced the levy of 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 Safeguard Duty until August 20, 2018

However, after the sudden imposition of safeguard duty, Hero Future Energies, ACME Solar and Vikram Solar filed new petitions in the Orissa High Court against the imposition of the safeguard duty by the ministry.

Speaking to Mercom, Sunil Jain, the CEO Hero Future Energies, had said back then, “The DG Safeguard has not taken cognizance of developers’ views and has exceeded his brief. We are not clear if this announcement is also a contempt of court, as the Orissa High Court had put a stay in place up to August 20, 2018. Now that the duty is being levied, our plea is to make the exercise of pass-through option seamless and practical. The process should be easy so that the capital does not get stuck in a loop of government departments and departmental procedures. Projects that have been already bid out will be affected by this sudden imposition of safeguard duty. Most developers wouldn’t have factored in the added costs which may easily lead to NPAs. This is the plea we have made in the court against the safeguard duty imposition notification.”

Vikram Solar’s petition stated the following:

  • Suitable exemption/clarification for SEZs (Special Economic Zones) from duties of safeguard, which will put SEZs at par with manufacturing units located in domestic tariff area (DTA).
  • Considering SEZ units as a part of domestic industry (DI) for the purpose of safeguard investigation.
  • EPC contracts which are already awarded should be kept out of the ambit of safeguard duty

“Imposition of duties of safeguard without the relief and clarification listed above will not serve its desired purpose, which is to boost the domestic manufacturing industry,” the company stated in an emailed response to Mercom.

The safeguard duty is currently applicable to companies in SEZ affecting a majority of the domestic solar manufacturing capacity.

Mercom recently reported that the MNRE had also written to the Finance Ministry in the past that any project already under contraction should not be affected by the safeguard duty. Though, the ministry has not issued any notification in this regard yet.

Image credit: Azure Power