Background
Cogestar 3 operates a natural-gas-fired cogeneration facility that produces, among other things, thermal energy. It sells that energy to another company located at the same site, which uses the heat to manufacture plaster products.
In February 2020, Cogestar 3 sought a partial refund of the domestic consumption tax on natural gas (TICGN) paid for 2019, claiming the statutory exemption for gas used in manufacturing nonmetallic mineral products. Customs rejected the claim, and the Douai Court of Appeal upheld that decision because Cogestar 3—the gas’s final consumer—produced heat rather than plaster products. Cogestar 3 appealed to the Court of Cassation.
The Court’s Holding
The Court of Cassation held that, under the then-applicable Customs Code provisions and Article 4 of Decree No. 2008-1001 of September 24, 2008, natural gas is exempt from TICGN when used as fuel in a process for manufacturing nonmetallic mineral products, including plaster products.
The appellate court’s own findings showed that part of the gas used by Cogestar 3 contributed directly, as fuel, to the plaster-manufacturing process. It did not matter that Cogestar 3, as the gas’s final user, was not itself the company manufacturing the plaster products. The Court therefore quashed the Douai judgment in full and remanded the case to the Paris Court of Appeal.
Key Takeaways
- The manufacturing exemption turns on how natural gas contributes to the qualifying production process, not solely on the identity of its final consumer.
- Gas used to generate heat may qualify when that heat directly serves the manufacture of nonmetallic mineral products such as plaster goods.
- The Court did not itself award the requested refund; it returned the dispute to the Paris Court of Appeal for further proceedings.
Why It Matters
The ruling rejects a requirement that the entity consuming the gas must also manufacture the qualifying products. It may therefore support exemption or refund claims involving on-site energy suppliers whose fuel directly contributes to another company’s covered manufacturing process.