UPDATE 1-Volkswagen India says will contest green court's $71 mln penalty

(Recast to change source, adds company comment)

BENGALURU/NEW DELHI, March 7 (Reuters) - Volkswagen will challenge a ruling by an Indian environment court that imposed a fine of 5 billion rupees ($71 million) on the German carmaker for emission violations.

An investigation by the Indian government in 2015 found that Volkswagen had flouted local pollution limits and the company was forced to recall 323,700 cars https://in.reuters.com/article/volkswagen-emissions-india/volkswagen-group-to-re c a l l - 3 2 3 7 0 0 - d i e s e l - c a r s - i n - i n d i a - i d I N K B N 0 T K 4 L 1 2 0 1 5 1 2 0 1 in the country. That ruling came two months after it admitted to cheating U.S. diesel emissions tests ttps://www.reuters.com/article/us-usa-volkswagen/volkswagen-shar es-plunge-on-emissions-scandal-u-s-widens-probe-idUSKCN0RL0II201 50921.

"The Volkswagen Group in India reiterates that all cars from the group are compliant with the emission norms defined in India," Volkswagen Group India said in a statement.

Volkswagen plans to contest the National Green Tribunal's (NGT) order at the Supreme Court.

The diesel emissions scandal has been the biggest business crisis in Volkswagen's 82-year history. Since the "dieselgate" scandal became public, VW has set aside about $30 billion to cover fines, vehicle refits to remove the illegal "defeat device" software and other costs.

In January NGT fined Volkswagen 1 billion rupees in a separate case relating to excess emissions of nitrogen oxide, a smog-forming pollutant linked to lung and heart disease.

Volkswagen had responded by saying its cars complied with India's emissions regulations, but it would comply with the order and pay the fine. ($1 = 70.0075 Indian rupees)

(Reporting by Aditi Shah in New Delhi and Krishna V Kurup in Bengaluru Additional reporting by Sudarshan Varadhan Editing by David Goodman)