Nil special additional excise duty on E22–E30 petrol blends: What Notification No. 27/2026 means for industry
The Central Government has issued Notification No. 27/2026-Central Excise dated 10th June 2026, further amending Notification No. 28/2002-Central Excise. Through this amendment, the benefit of Nil rate of special additional excise duty is now expressly made available to petrol blended with higher proportions of ethanol – namely 22%, 25%, 27% and 30% by volume.
These higher ethanol blends are recognised through insertion of new Serial Nos. 4E, 4F, 4G and 4H in the existing exemption notification. Each new entry sets out precise conditions regarding:
- Composition of the blend (petrol vs. ethanol percentage by volume)
- Tax treatment of the petrol component (excise duty)
- Tax treatment of the ethanol component (GST–related levies)
- Mandatory compliance with Bureau of Indian Standards (BIS) specification IS 19850
The measure reinforces the Government’s broader policy push for enhanced ethanol blending in automotive fuels, supporting environmental goals, reducing crude oil import dependence and advancing national blending targets.
Legal basis and structure of the amendment
Statutory powers invoked
The Central Government has acted under:
- sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944); and
- section 147 of the Finance Act, 2002 (20 of 2002),
declaring that the amendment is necessary in the public interest. Using these enabling provisions, the Government modifies the pre-existing Notification No. 28/2002-Central Excise dated 13th May, 2002, originally published as G.S.R. 361(E).
Nature of the amendment
In the TABLE appended to Notification No. 28/2002-Central Excise, new entries are slotted after Serial No. 4D. The newly inserted serial numbers are:
- 4E – 22% ethanol blended petrol
- 4F – 25% ethanol blended petrol
- 4G – 27% ethanol blended petrol
- 4H – 30% ethanol blended petrol
Each of these entries prescribes:
- The specific volumetric composition of motor spirit (petrol) and ethanol.
- The requirement that petrol must have borne “appropriate duties of excise”, as defined in the Explanations.
- The requirement that ethanol must have suffered “appropriate Central tax, State tax, Union territory tax or Integrated tax” under the GST framework.
- Conformity with IS 19850 standards.
- A Nil rate of special additional excise duty when all conditions are satisfied.
Detailed conditions for each higher ethanol blend
Entry 4E – 22% ethanol blended petrol (E22)
Under Serial No. 4E, the following blend qualifies:
- A fuel mixture that:
- Consists by volume of:
- 78% motor spirit (petrol); and
- 22% ethanol;
- The 78% petrol component must have already borne the appropriate duties of excise.
- The 22% ethanol component must have already suffered the appropriate Central tax, State tax, Union territory tax or Integrated tax, as applicable.
- The final product must conform to BIS specification IS 19850.
- Consists by volume of:
The entry prescribes a Nil rate of special additional excise duty, subject to these requirements.
Explanation for “appropriate duties of excise” and “appropriate taxes”
For 4E, the Explanation clarifies that:
“appropriate duties of excise” covers:
- Duties of excise leviable under the Fourth Schedule to the Central Excise Act, 1944 (1 of 1944);
- Additional duty of excise under section 112 of the Finance Act, 2018 (13 of 2018);
- Special additional excise duty under section 147 of the Finance Act, 2002 (20 of 2002);
- Additional duty of excise (Agriculture Infrastructure and Development Cess) under section 125 of the Finance Act, 2021 (13 of 2021);
- Read along with any relevant exemption notification currently in force.
“appropriate Central tax, State tax, Union territory tax and Integrated tax” refers to:
- Levies chargeable under:
- Central Goods and Services Tax Act, 2017 (12 of 2017);
- The respective State Goods and Services Tax Act;
- Union Territory Goods and Services Tax Act, 2017 (14 of 2017);
- Integrated Goods and Services Tax Act, 2017 (13 of 2017).
- Levies chargeable under:
In essence, both components must be fully tax-paid according to their respective statutory regimes before the Nil special additional excise duty benefit can be claimed on the final E22 petrol blend.