The government on Monday issued a notification putting on hold the imposition of the safeguard duty on the import of solar cells from China and Malaysia following a stay order by the Orissa High Court.
The Centre had imposed a safeguard duty of 25% on solar cells imported from China and Malaysia for the period from July 30, 2018, to July 29, 2019, following which the duty was to be reduced to 20% for the next six months, and further to 15% in the six months following that. Several firms filed writ petitions in the Orissa High Court against the imposition of the duty.
“It has been decided not to insist on payment of safeguard duty, for the time being,” the Department of Revenue, Finance Ministry said in the notification, citing the stay order.
“Till further direction from the Board, the said goods, namely, solar cells whether or not assembled in modules or panels would, in respect of said safeguard duty, be assessed provisionally on furnishing of simple letter of undertaking by the concerned person.”
“While this would provide interim relief from payment of safeguard duty to the solar cell importers, whether eventually it would be payable and be a cost or not would depend on the finalisation of the proceedings before the High Court,” Abhishek Jain, Tax Partner, EY India said. “Further, given that it is only an interim relief, whether the solar players should factor the safeguard duty as a cost or not would still be an important decision point.”
While the safeguard duty was meant to help the domestic solar cell manufacturers, sector analysts and industry players said that not only was the period of two years too little to provide any real benefit, but also that the safeguard duty would adversely impact ongoing solar projects dependent on imported cells.