Solar developers stranded as officials demand import duties on certain modules

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Moneycontrol News

The country's energy projects could face difficulties with officials demanding...

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Moneycontrol News

The country's energy projects could face difficulties with officials demanding payment of import duties on certain modules which had no levy till now, reports The Economic Times.

According to the report, officers are now classifying these modules as "electrical motors and generators" that attract a levy of 7.5 percent along with 2 percent education cess and one percent secondary and higher education cess.

The developers are stranded as 90 percent of these input modules are not produced in India. Nearly 1,000 modules are stranded at the Chennai port due to this.

The developers fear that the situation could hurt loan repayments and make achieving targets difficult.

The Ministry of New & Renewable Energy (MNRE) is looking into the matter and has written to the Finance Ministry on same. MNRE Secretary Anand Kumar said that it is a matter of wrong classification.

Solar modules currently come under duty-free import category of “diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels, light-emitting diodes; mounted piezo-electric crystals”.

"At least USD 5-7 billion worth of solar modules must have been imported over all these years without attracting any import duty," a developer told ET. Developers have Rs 375 crore worth of goods stuck, he added.

This is not the first time such a thing has happened. According to developers, ports have misinterpreted the situation earlier too.

A developer, in a letter to the Central Board of Excise and Customs, said: "They (custom officials at Chennai port) are forcing us to categorise the modules as DC (direct current) generators. We are hopeful you will appreciate that this is a clear case of misinterpretation of clauses, which is resulting in amplified negative impacts on us by way of huge demurrage, shipping charges, duties, as also the cascading effect of missing out on project timelines.”

However, developers fear that they will have to pay charges for the modules stuck at the Chennai airport, where officials are asking for the payment or for some bank guarantee for these modules.

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