Solar Panels, Worth Rs 500 Crore Left Stranded At Chennai Port

The  customs department is firm on its statement that panels can be used to produce the electricity directly.

The three to four months old dispute between the customs department and the importers incepted at Nhava Sheva port making impactful affects at Chennai. The dispute has left the Solar Power producers berserk as over 1,000 containers of China manufactured solar panels stranded uncleared in Chennai. The panels imported fro from Chennai port and some from Katupalli and Krishnapattinam ports were bound to deliver in Telangana and Karnataka.

The crux of the dispute lies between the improper inventory of Solar panels and electrical motors and generators as the Former (solar panels) on which zero percent customs duty is levied  has been categorized  as the latter (electrical motors and generators) subjected for 7.5 percent customs duty.

Also, as per the reports a tiff between the department and the importers against the usage of solar panels is the major cause of the dispute, as the department is firm on its statement that panels can be used to produce the electricity directly and the importers urge that the grids will distribute the produced electricity, hence they cannot be used directly.

The solar panels were ordered in view of the government subsidy, the additional customs duty of 7.5%  was levied at when the orders were placed. Around five FEUs (forty foot equivalent units) loads of solar panels are required for 1MW of solar power according to the sources.

The set target of nearly 100,000 MW by 2021-22 for grid-connected solar power projects, under the National Solar Mission approved by Union Cabinet on June 2015. The scheme made compulsory the bulk import of china-made solar panels.

Raj Prabhu, CEO, Mercom Capital Group, a global renewable energy consulting company said “Developers are facing extremely competitive solar auctions, which means returns are low and every penny counts. By misclassifying solar panels, Customs have further disrupted development of projects by delaying some projects by months and also adding to project costs.”

According to the duty-free import provision, solar modules were imported under a category permitting duty-free import of “diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells, whether or not assembled in modules or made up into panels, among others.

Source: Business Line