CBIC Exempts Biogas in Blended CNG from Excise Value; Defers Additional Duty on Diesel

CBIC to (i) exempt value of Biogas/ Compressed Biogas contained in blended CNG along with appropriate GST paid on it, from the value of such blended CNG for the purpose of calculation of Central Excise duty on such blended CNG and (ii) to defer implementation of levy of additional duty of Rs 2 per litre on unblended diesel till 31^st March 2028

The Central Government, through Notification No. 02/2026–Central Excise dated 1 February 2026 issued by the Ministry of Finance, has amended Notification No. 11/2017–Central Excise to extend certain sunset provisions and introduce a new excise entry for blended clean fuels. The validity of specified exemptions has been extended from 2026 to 2028, providing continuity in the excise framework. A new serial number 9A has been inserted to levy excise duty at 14% on Compressed Natural Gas (CNG) when blended with Biogas or Compressed Biogas (CBG). Importantly, for valuation purposes, the value of biogas/CBG and the GST paid on such biogas/CBG are to be excluded while computing excise duty on the blended CNG. An additional explanation clarifies the meaning of “appropriate taxes” by linking it to applicable GST laws. The notification comes into force from 2 February 2026 and reflects policy support for cleaner fuel blending with valuation clarity.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

Notification No. 02/2026-Central Excise | Dated: 1^st February, 2026

G.S.R….(E).-In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 11/2017-Central Excise, dated the 30^th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 793(E), dated the 30^th June, 2017, namely:-

In the said notification,-

(a) in the Table,-

(i) against Sl. No. 3, in column (3), after item (ii), in the proviso, for the figures “2026”, the figures “2028” shall be substituted;

(ii) after Sl. No. 9 and the entries relating thereto, the following Sl. No. and entries shall be inserted, namely:-

(b) after Annexure, in the proviso, in item (b), for the figures “2026”, the figures “2028” shall be substituted;

(c) after Explanation 2, the following explanation shall be inserted, namely:-

“Explanation 3.- For the purpose of goods described in column (3) against serial number 9A of the Table, “appropriate Central tax, State tax, Union territory tax and Integrated tax” means the Central tax, State tax, Union territory tax and Integrated tax leviable under the Central Goods and Services Tax Act, 2017 (12 of 2017), State Goods and Services Tax Act of the State concerned, the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) and the Integrated Goods and Services Tax Act, 2017 (13 of 2017), respectively. ”.

2. This notification shall come into force on the 2^ndday of February, 2026.

[F. No. 334/05/2026-TRU]

(Dheeraj Sharma)
Under Secretary to the Government of India.

Note:- The principal notification No. 11/2017-Central Excise, dated the 30^th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 793(E), dated the 30^th June, 2017 and was last amended vide notification No. 01/2025-Central Excise, dated the 1^st February, 2025, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub- section (i) vide number G.S.R. 107 (E), dated the 1^st February, 2025.