CERC Grants Reimbursement Of Safeguard Duty To Avaada Energy Under Change in Law

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Central Electricity Regulatory Commission (CERC) recently passed an order on the Power Purchase Agreements executed between Avaada Clean Energy Private Limited and Solar Energy Corporation of India for seeking approval of Safeguard Duty as an event under ‘Change in Law’.

Avaada Clean Energy Private Limited is a project company of M/s. Giriraj Renewables Private Limited. It is a solar generating company and has set up 5 MW of solar capacity projects in Kanpur, Uttar Pradesh. The project was sanctioned and implemented under the ‘Defence Scheme’ of Jawaharlal Nehru National Solar Mission (JNNSM). It has filed the petition on the Power Purchase Agreement (PPA) executed between the company and the Ordnance Factory Board, Kanpur (Petitioner No. 1) for seeking approval of Safeguard Duty as an event under ‘Change in Law’. 

Solar Energy Corporation of India (SECI), is responsible for implementation of a number of schemes of MNRE, the major one being the VGF schemes for large scale grid connected projects under Jawaharlal Nehru National Solar Mission (JNNSM), solar park scheme and grid connected solar rooftop scheme.

Avaada Clean Energy Private Limited made the following prayers: Hold and declare that the imposition of the Safeguard Duty on Solar Cells whether or not assembled in modules or panels, Restore the Petitioner to the same economic condition prior to occurrence of the Change in Law by way of adjustment in tariff  by increasing the tariff through suitable mechanism and  direct a lump sum compensation of Rs. 3,60,11,266/- to be paid  of the additional levy of Safeguard Duty and IGST on importing solar cells plus interest/carrying cost at the rate of 15% p.a. from the date of impact till reimbursement.

Safeguard Duty at twenty five percent to fifteen percent ad valorem minus antidumping duty payable has been levied on solar cells whether or not assembled in modules or panels when imported into India during the period from 30th July, 2018 to 29th July, 2020. The Commission stated that in cases where imported goods are liable to Safeguard Duty, the value of IGST levied on the Safeguard duty is also to be allowed.

Commission suggests that the Petitioner and Respondent may mutually agree to a mechanism for the payment of such compensation on annuity basis spread over such period not exceeding the duration of the PPA as a percentage of the tariff agreed in the PPA.

The Commission directs Avaada Clean Energy Private Limited  to make available all relevant documents exhibiting clear and one to one correlation between the project and the supply of imported goods, duly supported by relevant invoices and Auditor’s Certificate.

The commission also directs that  compensation of Rs. 3,60,11,266/-  must be to be paid to Avaada Clean Energy Private Limited within sixty days of issue of this Order or from the date of submission of claims.

To know more about the order refer to the document below:

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