Supreme Court lifts diesel ban in Delhi-NCR against levy of 1% green cess

Supreme Court lifts diesel ban in Delhi-NCR against levy of 1% green cess

12th Aug 2016 3:10 pm

Apex court directs all manufacturers to deposit 1 percent environment compensation cost on ex showroom price of vehicles above 2,000cc in Delhi-NCR.

The Supreme Court today lifted the ban on registration of diesel vehicles with engine capacity of 2,000cc and above in the Delhi-NCR region. However, the apex court announced the levy of 1 percent green cess on the ex-showroom price of such vehicles which has to be deposited before the Central Pollution Control Board.

The apex court will decide at a later stage whether smaller diesel cars should be brought under the purview of payment of the environment cess.

In a bid to tackle the rising levels of pollution in Delhi-NCR, the Supreme Court had imposed a ban on the sale of diesel cars and SUVs with engine capacities over 2,000cc in the region, starting mid-December and the same was extended multiple times.

Automakers such as Tata Motors, Toyota Kirloskar Motors and Mercedes-Benz India were among the ones seriously affected by the ban since Delhi-NCR region accounted for a significant chunk of its volumes. 

Speaking to Autocar India, an official from Toyota-Kirloskar said that the decision by the Supreme Court certainly comes as a relief, but the company has already paid the price of the ban. “Delhi-NCR accounts for around eight-10 percent of our sales and a such a ban definitely had an impact on volumes. Moreover, with the launch of the Innova Crysta, if not for the ban, the Delhi-NCR region could have accounted for even 12 percent of the sales. With regard to the one percent cess, it will be passed on to the buyer.”

Earlier this month, Mercedes-Benz India appealed against the ban and said it was ready to pay the environmental cess of one percent levied on the sale of diesel cars. “We have followed the earlier direction of the Supreme Court and filed an Interim Application seeking relief on the ban on our cars. Following the court suggestion, we as a voluntary interim measure, offered to pay 1 percent of the ex-showroom price of the vehicle towards anticipated Environment Compensation Charge as a deposit, and not on the premise that our vehicles are polluting the environment,”  the carmaker said in a statement today.

Commenting on the Supreme Court's judgement, Pawan Goenka, Executive Director, Mahindra & Mahindra said, "We are very relieved with the decision of the Supreme Court today. Hope this decision will put all controversy surrounding diesel fuel behind us and we will be able to focus on the more important task of making our vehicles compliant with BS 6 norms by April 2020”.

The indefinite ban on sale of large cars had put many automakers in a state of disarray with the automotive body Society of Indian Automobile Manufacturers (SIAM) saying the move points towards an erratic policy regime and has discouraged carmakers from investing in the country. However, the central government, which had strongly come out against the ban, opposed the imposition of the cess saying it would hurt investments. 

“The Government of India is planning to undertake a study on the assessment of the cess required as well as appraisal of pollution levels. It will be either undertaken by the Ministry of Heavy Industries or under the direction of the Niti Aayog. That will be the real test as winter is coming when pollution levels also rise,” Vishnu Mathur, director general of apex industry body SIAM, said, welcoming the move. 

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