By Dolphy D’souza | Geetanshu Bansal, Chartered Accountant
The Battery Waste Management Rules (“Rules”), as amended, impose Extended Producer Responsibility (EPR) obligations on producers that place battery in the market. These obligations require producers to ensure collection, recycling, or refurbishment, of waste batteries equivalent to a fixed percentage of batteries placed by them in market in prior years, based on the prescribed life of different types of batteries. EPR obligations may be discharged either through in-house recycling (where registered) or by purchasing EPR certificates from authorised recyclers.
If a producer fails to meet its EPR targets, it must pay environmental compensation, typically linked to the maximum notified rates of EPR certificates. The Rule 4(6A) provides that, “ In case the Producer stops its operations, the Producer shall have to discharge its Extended Producer Responsibility obligation in respect of Batteries already made available in the market till closure of operations, in accordance with provisions of these rules” This is a key legal feature that significantly drives the accounting analysis.
This regulatory design raises an important question, should producers recognise obligation only toward recycling/ refurbishment required in the current year (linked to the look-back for that year) (f
