APTEL Accepts SGD As Change In Law, Relief Likely For Developers

In a case that involved a bunch of similar petitions from developers in Rajasthan executing projects worth 950 MW, and another batch in Andhra Pradesh involving projects worth 750 MW, the Appellate Tribunal for Electricity, has provided some measured relief for the developers involved.

The petitions bunched together by the APTEL bench involved the acceptance of Safeguard Duty (SGD), as a change in law event. For more recent readers, SGD was first imposed in 2018, via a safeguard Duty Notification No 01/2018 – Customs (SG) dated 30.07.2018 Issued by Ministry of Finance (Department of Revenue), for import of “Solar cells whether assembled in modules or Panels from China PR and Malaysia”. The notification imposed following rates of Safeguard Duty minus anti-dumping duty payable, if any, as : 25% ad valorem during the period from 30.07.2018 to 29.07.2019, 20% ad valorem during the period from 30.07.2019 to 29.01.2020 and 15% ad valorem during the period from 30.01.2020 to 29.07.2020.

Subsequent to this period, a second safeguard Duty Notification No 02/2020 – Customs (SG) dated 29.07.2020 was issued by Ministry of Finance for “import of solar cells whether assembled in modules or Panels” from Public Republic of China, Thailand and Vietnam.
The new notification imposed rates of Safeguard Duty minus anti dumping duty payable, if any, as : 14.9% ad valorem during the period from 30.07.2020 to 29.01.2021 and 14.5% ad valorem during the period from 30.01.2021 to 29.07.2021.

The developers involved in this order include Fortum Solar, Sitara Solar, ReNew, Mahindra Susten in Rajasthan. In Andhra Pradesh, it is  Ayana Solar, Sprng Energy, Adani Green Energy et al.

While the broad issue in Rajasthan was the refusal of Rajasthan Electricity Regulatory Commission to acknowledge SGD as a change in law event, in the case of Andhra Pradesh, it was the issue of APERC to dismiss claims due to the failure of firms to provide calculations in time to the regulator to provide relief.

The APTEL bench referred both the batch of petitions back to the regulators, while setting aside the order of RERC, and accepting the SGD as a change in law event. The regulators have been asked to work with the petitioners to calculate the amount involved as relief for the developers. SECI, the body involved as the signatory of PPA’s in most cases also got relief as the APTEL bench stressed that its own PSA’s with discoms were back to back arrangements, giving it every right to recover the extra amounts from the discoms.