Budget 2026-27 Revises Excise Valuation For Blended CNG By Excluding Biogas Component

As part of the Union Budget 2026–27, the Centre has proposed changes to how blended Compressed Natural Gas (CNG) is valued for the purpose of central excise duty.

Under the budget proposal, the transaction value used to calculate central excise duty on blended CNG will exclude the value of biogas or compressed biogas (CBG) in the blend. The Central tax, State tax, Union Territory tax, or Integrated tax paid on that biogas or CBG will also be excluded.

This change affects the excise valuation of blended CNG, which continues to be subject to central excise under the residual excise framework.

To give effect to the proposal, Notification No. 11/2017–Central Excise dated June 30, 2017 has been amended through Notification No. 02/2026–Central Excise dated February 1, 2026. The amendment will come into force from February 2, 2026.

At the same time, the Government has rescinded Notification No. 05/2023–Central Excise dated February 1, 2023. Under the earlier notification, excise duty on blended CNG was computed after excluding only the GST component paid on biogas or CBG.

With the new amendment, the entire value of biogas or CBG, along with the taxes paid on it, stands excluded from the excise valuation of blended CNG.

As a result, the excise duty base on blended CNG has been reduced.

The revised valuation mechanism will apply from February 2, 2026.