Potočnik, who was in charge of the environment dossier from 2010 to 2014, said, "I could hardly believe a company like VW could be so irresponsible and fundamentally stupid to do something like this."
During a four hour parliamentary hearing, he also condemned "resistance" from car manufacturers and others to EU-led efforts to strengthen vehicle emissions standards.
"The resistance seems to have been for cost reasons but this is a short-term and narrow minded policy," he declared.
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Last September, Volkswagen admitted to fitting cheat devices to more than 11 million vehicles. These were designed to deceive US authorities on the levels of harmful nitrogen oxide (NOx) emitted by a popular range of its diesel engines. The firm agreed to recall affected vehicles and remove the cheat devices.
Parliamentary inquiries and criminal investigations were launched in several jurisdictions, including the European Parliament which set up a special committee of inquiry into the scandal.
At a hearing on Monday, Potočnik pointed out that, during his term, he was responsible for air quality standards at EU level and not car emissions.
The first he knew about the scandal was when it broke in the media, he said, adding, "I - and the Commission - was totally unaware that a car manufacturer had been cheating on emissions."
He said that it could be argued that both he and the Commission "could and should" have done more to ensure that EU legislation in the field was being fully implemented.
"Better implementation of EU legislation was always a top priority for me but there is clearly a lot of unfinished work in this area," he said.
The committee of inquiry into emission measurements in the automotive sector (EMIS) heard the testimonies of both Potočnik and Antonio Tajani. Tajani, currently and MEP, served as European industry and entrepreneurship Commissioner over the same four-year period as Potočnik.
The packed hearing took place in the backdrop of a leak that exposed deep tensions between the two officials in the period preceding the cheating revelations.
A memo revealed a power struggle between the environment and industry departments of the Commission, with Potočnik accusing Tajani's office of caving in to demands of the car industry to "delay action" on reducing vehicular emissions. The memo from 2012 recognised the "failure" of the Commission to put emissions under control.
Some MEPs claimed the memo showed the Commission had "more than enough" information regarding the possible use of defeat devices by the car industry, but had failed to look into the issue further.
GUE/NGL group MEP Kateřina Konečná criticised Potočnik for not raising the alarm more broadly "given Tajani's inaction."
She said, "I was very disappointed by Potočnik's answers. He was trying to protect himself by claiming that the formal letter he wrote to Tajani in 2013 was basically all he could do on this matter and I refuse to believe that. He also blamed member states but ignored completely the vagueness in the Commission's legislation that gave enforcement little teeth.
"Still no one in the Commission has accepted responsibility over the series of mistakes and omissions. The inquiry committee is seeing a lot of dodging without any real results.!
Elsewhere, S&D spokesperson on the Dieselgate scandal, UK deputy Seb Dance, said, "Tajani ignored growing warnings, including a letter from Potočnik, that car companies could be using defeat devices to cheat emissions tests.
"Clearly, he didn't think to ask why the numbers - the gap between emissions recorded in the lab tests and on the road - didn't add up and conveniently preferred to believe that the problem did not exist.
"This begs the question that if Tajani thought the problem was limited to the weaknesses of the lab test, why did he oversee a significant delay in the introduction of real world testing for cars?"