Bio Diesel Makers Approach Supreme Court To Direct Oil Marketing Companies To Accept Their Supplies

The Supreme Court recently sought a response from the Union in a plea filed by the Biodiesel Association of India challenging the government notification, which extends the excise duty exemption on the sale of unblended High-Speed Diesel for another year, from April 1, 2025, to March 31, 2026.

The bench of CJI BR Gavai and Justice K Vinod Chandran issued notice in the application while hearing the batch of petitions in MC Mehta v. Union of India. 

ASG Aishwarya Bhati, appearing for the Union, sought time to file a reply, submitting that " We have a reason, we will place it on affidavit my lords." 

The bench agreed to grant 3 weeks to the Union to file its affidavit. 

Sr Advocate Apprajita Singh also appeared as the Amicus Curiae in the matter. 

The application seeks quashing of Notification No. 01/2025-Central Excise (G.S.R. 107E) dated February 1, 2025, issued by the Ministry of Finance, Department of Revenue. The notification, published in the Gazette of India (Extraordinary), extends the exemption of excise duty on the sale of unblended High-Speed Diesel for one year, effective April 1, 2025, to March 31, 2026.

The plea further prays for directions to Respondent Nos. 5 to 7, Oil Marketing Companies, to adhere to their respective Letters of Intent and published allocation quotas for bio-diesel supply issued in favour of members of the applicant association for the period October 2024 to September 2025, and to accept delivery of the allotted monthly and quarterly quotas of bio-diesel.

Referring to the National Policy on Bio-Fuels of 2018, the plea states that the use of bio-diesel substantially reduces hydrocarbon emissions by up to 70% and cuts CO₂ emissions by nearly 78% over its lifecycle compared to petroleum diesel.

It states that due to the advantages of biofuel, the government itself had promoted biodiesel production and blending under the National Bio-Energy Mission to curb pollution and reduce dependence on fossil fuels. 

The applicants are aggrieved that despite them commencing the production of the bio-fuel, the oil marketing companies have, to date, not started taking supplies from the Applicants. This was after the applicants emerged as successful allottees of tenders for manufacturing. 

In 2017 and 2022, the Ministry of Finance, Department of Revenue issued the notification levying a penalty on Oil Marketing Companies if they engage in retail sale of unblended HSD to consumers. The enforcement of the said penalty is being extended each year, against which the applicants are aggrieved. 

As per the plea, the extention of the enforcement of the penalty is arbitrarily affecting the livelihood of the applicants, it reasons that " the extension of penalty by the Ministry of Finance, Department of Revenue on sale of unblended High Speed Diesel (HSD) has resulted in conferring absolute discretion on the oil Marketing Companies, in the matter of blending or not of the biodiesel in HSD. The above discretion accorded to the oil Marketing Companies is dehors the scheme of National Policy on Biofuels, 2018/revised National Policy on Biofuels, 2022, framed by the Petroleum Ministry. The extension of the date of enforcement of penalty is against the very object and goal set by the Government of India, for blending of 5% bio-diesel in High Speed Diesel (HSD), by 2030." 

The following prayers have been made : 

(a) Quash the notification no.01/2025-Central Excise (G.S.R.107E) dated 01.02.25 issued/ published by the Ministry of Finance, Dept. of Revenue, Government of India in Gazette of India Extraordinary;

(b) direct the Ministry of Finance, Dept. of Revenue and Ministry of Petroleum & Natural Gas, to make strict compliance of Ministry of Finance notification no.31/2022-Central Excise dated 30.09.2022, whereby levy of additional duty/tariff on Oil Marketing Companies for non-blending of bio-diesel with High Speed Diesel (HSD) was notified;

(c) issue direction to the Respondent Nos.5 to 7 oil Marketing Companies to honour/abide by its Letter of Intent/published list of allocated quotas of biodiesel issued in favour of the members of the applicant association (i.e. the successful allottees) for supply of Bio-diesel for the period from October, 2024 to September, 2025;

(d) issue direction to the Respondent Nos.5 to 7 oil Marketing Companies to accept/offtake the delivery of quarterly/monthly allocated quota of Bio-diesel from the allottees.

(e) pass any other order or further orders that may be deemed fit and proper in the facts and circumstances of the case

The application is drawn with the assistance of Advocate Sanjeev Kumar. 

Case Details : M.C. MEHTA Versus UNION OF INDIA AND ORS | W.P.(C) No. 13029/1985