The Central Government has withdrawn the excise duty exemption earlier granted to Compressed Natural Gas (CNG) blended with Biogas or Compressed Biogas (CBG). 

The move comes through Notification No. 03/2026–Central Excise, issued by the Ministry of Finance (Department of Revenue) on February 1, 2026.

The exemption was originally introduced via Notification No. 05/2023–Central Excise dated February 1, 2023, under which CNG was exempted from so much of the central excise duty leviable on the portion attributable to GST paid on Biogas or Compressed Biogas blended with CNG.

This measure was aimed at encouraging the use of renewable fuels, promoting the biogas ecosystem, and supporting India’s broader climate and energy transition goals by incentivising blending of biogas with conventional natural gas.

By exercising its powers under Section 5A(1) of the Central Excise Act, 1944, the Central Government has now rescinded the 2023 exemption notification in public interest. 

As a result, the excise duty exemption on the GST component of Biogas/CBG blended with CNG will no longer be available. Suppliers and distributors of blended CNG will be liable to pay full applicable excise duty, without any carve-out linked to the biogas component. The rescission does not affect past transactions, as the notification clearly protects “things done or omitted to be done” prior to its withdrawal.

The notification explicitly states that the rescission will come into force from February 2, 2026, giving the industry a narrow window to realign pricing, invoicing, and compliance systems.

Notification Details

Notification No.

Date: 01/02/2026

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