Relief for Solar Developer Against Retrospective Denial of Concessional Import Duty

The High Court directs Customs Board not to prevent developers from importing goods


The Delhi High Court has granted a solar developer interim protection against the retrospective denial of a concessional rate of duty on imports for a 600 MW solar power project.

The Court directed the Customs Board, which is part of the Central Board of Indirect Taxes and Customs (CBIC), not to take any action regarding the import of goods as the products had been registered under the Project Import Regulations Act, 1986.

After the government raised basic customs duty on imported solar modules by 40% earlier this year, a slew of companies had requested the Customs department to allow imports under the Act, which provided for a single and concessional rate customs duty rate for most of the equipment needed to set up a power project.

However, the Act does not specify that solar projects are also allowed under the provisions. The government in October amended the Act explicitly disallowing the provisions to be used for solar projects even though it was not clear whether the change would be applied prospectively or retrospectively.


ReNew Hans Urja is developing a 600 MW solar power project in Rajasthan’s Jaisalmer district. It submitted before the Commission that it was within its rights to import items needed for the project at a concessional rate of duty which, according to the Customs Board, stood withdrawn as per the notification dated October 19, 2022.

The solar developer noted that even if the notification was taken at face value, it was designed to come into force on October 20, 2022. It argued that its solar project should continue to avail the benefits of the concessional rate of customs duty since it had come into being before the date of the notification.

ReNew Hans Urja said it had submitted a continuity bond of ₹18.45 billion (~$222.71 million) and a bank guarantee worth ₹10 million (~$120,712). The decision of the Customs Board was against the rule of law and had infringed upon the developer’s right with retrospective effect, the petitioner submitted.

The Customs Board argued that the petitioner had not fulfilled the criteria for being accorded the concessional rate of duty.

Court’s observation 

The High Court observed that if no interim protection were granted to the developer, the entire import process would likely get derailed. Although a letter of credit has to be established between March and April 2023, the uncertainty as to whether the petitioner would be entitled to a concessional rate of duty would perhaps delay the execution of the project.

It noted that ReNew Hans Urja had submitted a continuity bond for a large sum of money, along with a bank guarantee, and therefore no action should be taken against the developer at the stage of import.

In March this year, the Delhi High Court had sought a clarification from the Ministry of New and Renewable Energy on the provisions made to protect solar projects from the adverse impact of the mandate to use modules from the Approved List of Modules and Manufacturers (ALMM).