Press Release | June 01, 2018
HSA Advocates recently filed a writ representing ACME Solar Holdings Ltd., before the Delhi High Court, challenging the preliminary findings of the Directorate General of Safeguards, Ministry of Commerce (“Authority”) as well as the Authority’s recommendation for imposing provisional safeguard duty on import of solar panels / modules from China at 70 per cent ad valorem.
The recommendations were issued by the DGS on the basis of a complaint filed by Indian Solar Manufacturers Association (ISMA) claiming to represent domestic manufacturers. HSA crafted the writ on two fundamental grounds that went to the root of the Authority’s jurisdiction to even make these recommendations. In doing so, HSA distinguished the matter from the earlier writ that had been filed by Shapoorji Pallonji in the Madras High Court, which was based on the sole ground that the said recommendations were issued without hearing the interested parties. This ground of challenge, in any event, was not sustainable as it is contrary to the provisions of the Safeguard rules, which do not provide for hearing before the preliminary findings. Further, this position was settled by the Delhi High Court in an earlier Saint Gobain case. Hence, the said petition by Shapoorji Pallonji was, in our opinion, rightly rejected by the Madras High Court.
The fundamental challenge to the Authority’s jurisdiction was premised on the following grounds:
(a) The Authority wrongly treated SEZ Units as domestic industry, thereby contradicting itself in an earlier order of the Authority itself; and
(b) The Authority wrongly invoked the emergency provisions under the Safeguard Rules, to justify its’ making the recommendations. Of course, additional grounds demonstrating the economic impact of the recommendations on the domestic solar generating industry were also highlighted. During the hearing on May 25, 2018, the Standing Counsel for the Government did not oppose the petition and instead submitted to the Court, copies of confidential minutes of meeting of the Standing Committee on Safeguards, Ministry of Commerce. The Court after going through the minutes remarked that from the minutes, it appears, that the Government is not contemplating levy of provisional safeguard duty at this stage. After observing this, the Hon’ble High Court directed the DGS and the Ministry of Commerce to consider the writ petition as a representation of Acme and consider the same before passing a final decision in the matter. The Court also gave leave to Acme to file a fresh petition in case of any adverse order.
The above proceedings assume significance since, in response to the petition filed by HSA Advocates, the Standing Counsel for the Government, on instructions, shared the confidential report being minutes of the meeting of the Standing Board on safeguards with the High Court, which clearly spelt out the intention of the Government not to levy any provisional safeguard duty at this stage. Prior to this petition, the position of the Govt. of India on this issue was opaque. This petition precipitated a firm position being taken by the Govt. before the High Court, thereby bringing clarity on this issue amongst the solar power developers. The Govt. is rolling out a significant solar power initiative and has committed to offer up to 100 GW of solar power generation projects, which would entail further capital investment in the range of USD 600 bn.