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Delhi High Court quashed CBIC Instruction, Upholds MOOWR Benefits for Solar Industry

The solar industry received a significant legal reprieve after the Delhi High Court quashed the Instruction No.13/2022-Customs, issued on July 09, 2022. This judicial intervention has substantial implications for the import and warehousing of solar panels and related equipment under the Manufacture and Other Operations in Warehouse (No.2) Regulations, 2019 (MOOWR).

Background of the Case:

The Central Board of Indirect Taxes and Customs (CBIC) had issued an instruction stating that permissions under section 65 of the Customs Act, 1962, for the warehousing of imported solar panels, solar modules, and related accessories, categorized as capital goods for generating electricity from sunlight, would not qualify as resultant goods for home consumption under the MOOWR Regulations. Additionally, the instruction mandated the immediate review of permissions previously granted to such generating units and prohibited the issuance of new permissions in these cases.

Judicial Proceedings and Ruling:

In the case titled ACME Heeragarh Powertech Pvt Ltd v. CBIC, the aggrieved party challenged the aforementioned instruction through a Writ Petition filed in the High Court of Delhi. The court meticulously examined the regulatory framework and the intended scope of Section 65 of the Customs Act as applied to the MOOWR Regulations.

The Delhi High Court concluded that the solar firms do indeed fall within the ambit of the MOOWR scheme, thus qualifying them to avail themselves of its associated benefits. The court declared that the impugned instruction requiring the review of existing licenses and the cessation of further permissions was inconsistent with the legislative intent and purpose of the Customs Act and the MOOWR Regulations.

Conclusion of the Court:

The High Court’s ruling not only quashed the directive to review and restrict the warehousing permissions but also affirmed that companies intending to claim duty deferment benefits for the import of solar modules and cells for electricity generation under the MOOWR Regulations are eligible to do so.

This landmark decision is poised to bolster the growth and operational efficacy of the solar industry, ensuring that regulatory measures align more closely with the sector’s development objectives and the broader environmental goals of promoting renewable energy sources.