Excise Duty Framework Updated for CNG–Biogas Blends

The Ministry of Finance, Department of Revenue, has issued Notification No. 02/2026–Central Excise dated 1 February 2026, amending Notification No. 11/2017–Central Excise. The amendment has two significant implications for the energy and fuel sector.

First, the validity of a key proviso linked to Sl. No. 3 in the existing exemption table has been extended, with the sunset year revised from 2026 to 2028. This provides regulatory continuity and certainty to affected industries.

Second, a new entry, Sl. No. 9A, has been inserted to specifically address Compressed Natural Gas (CNG) blended with Biogas or Compressed Biogas (CBG). Such blended fuel will now attract central excise duty at the rate of 14 percent. Importantly, the notification clarifies that, for valuation purposes, the excisable value of blended CNG will exclude the value of the biogas or CBG component, as well as the GST already paid on that component.

The move reflects a policy balance between revenue considerations and promoting cleaner, blended fuel alternatives.