Not implementing Safegaurd Duty on solar modules and cells for time being: Ministry of Finance

A recent development in the safeguard duty event, the Orissa High Court has directed the Ministry of Finance to withdraw the duty by August 13, 2018, and issued a stay until August 20, 2018. The stay came after a petition was filed by Hero Future Energies, ACME, and Vikram Solar against the Directorate General of Trade Remedies (DGTR).

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 the of domestic industry for the purpose of safeguard investigation.
  • EPC contracts which are already awarded should be kept out of the ambit of safeguard duty

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

Ministry of Finance had announced to levy 25% safeguard duty based on the final recommendation proposed by the DGTR. The duty came into effect from July 30, 2018. The ministry levied the duty despite Orissa High Court’s order to put a stay on the safeguard duty on solar modules and cells. ACME Solar had filed a petition post the DGTR recommendations and received the stay order from the court. The Orissa court had then directed the government not to issue any notification regarding the safeguard duty until August 20, 2018. But after the sudden imposition of the duty, the three companies filed a new petitions in the Orissa HIgh Court.

Hence, considering the recent stay order put in force by the Orissa on the safeguard duty notification, the Ministry of Finance announced that the government will, for the time being, not imply the payment of safeguard duty on solar imports.

The current scenario draws doubts on the future of safeguard duty and whether the Indian solar sector embraces it going ahead.

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