Bengaluru: The Supreme Court on Monday allowed the government to implement safeguard duty on imported solar panels and modules, setting aside an order of the Orissa High Court that stayed the imposition of the levy, three people aware of the development said.

The Orissa High Court will continue to hear a petition filed against the safeguard duty, but there will be no stay on imposing it, the people said. If the high court upholds the petition and rules against the safeguard duty, the amount collected from importers will be refunded, they said.

The Directorate General of Trade Remedies (DGTR) had recommended the safeguard duty on solar panels and modules imported from China and Malaysia in mid-July. It suggested 25% for the first year, 20% for the first six months of the second year and 15% for the remaining six months.

The Orissa High Court stayed the imposition of the duty until August 20 after Acme Solar Holdings, a developer, opposed it. The finance ministry then instructed customs officials not to insist on payment of safeguard duty, but to take a bond for the same amount while the stay was in force. For various reasons, the case was not heard on August 20, so the stay continued.

Local solar manufacturers had approached the Director General of Safeguards in December 2017, claiming that growing imports of solar equipment was crippling their businesses. In January, the DG Safeguards recommended setting a safeguard duty of 70% for 200 days on solar imports in a preliminary order.

Following petitions filed by developers, the Madras High Court stayed the order. Subsequently, the DGTR announced its final decision in mid-July. Acme Solar filed a fresh petition in the Orissa High Court against the final order as well.

The ministry of new and renewable energy and solar developers have opposed the safeguard duty, claiming it could potentially put the brakes on India’s programme of setting up 100,000 MW of solar capacity by 2022 because it would lead to higher costs and increased tariffs. India has 23,000 MW of solar capacity.