Delhi High Court Rules in Favor of Solar Power Firms, Quashes CBIC Notices
With this legal victory, solar power developers importing panels and modules can avail themselves of the MOOWR scheme.
May 10, 2024. By Abha Rustagi
In a legal victory for solar power firms, the Delhi High Court has overturned show cause notices issued by the Central Board of Indirect Taxes and Customs (CBIC), allowing these companies to benefit from the Manufacturing and Other Operations in Warehouse Regulations (MOOWR) scheme.
The court's decision, delivered in the case of ACME Heeragarh Powertech Pvt Ltd Vs. CBIC, marks a turning point in a legal battle over the eligibility of solar power developers for the MOOWR scheme. Initially introduced in 1996 and revamped in 2019 to align with the 'Make in India' initiative, MOOWR aims to incentivize domestic manufacturing and production by permitting the deferral of customs duty on imports of goods used in manufacturing processes.
The CBIC had previously ruled that solar power firms were not eligible for the MOOWR scheme, leading to the issuance of show cause notices (SCNs) for non-payment of duties. However, the Delhi High Court's ruling has now quashed these notices, affirming that solar power firms indeed fall under the purview of MOOWR.
With this legal victory, solar power developers importing panels and modules can avail themselves of the MOOWR scheme, which allows them to defer payment of 44 percent customs duty and 12 percent GST until the equipment is operational for electricity generation.
The MOOWR scheme has been a critical aspect of the solar industry's operations, enabling companies to import inputs and capital goods for power generation within the country. However, confusion arose when the Customs Department issued a circular stating that such companies were not eligible for the scheme.
In response, ACME Heeragarh Powertech Pvt Ltd filed a writ petition challenging the CBIC notices, leading to the ruling by the Delhi High Court.
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