The reporting on this issue has been sparse, but here's a piece I dug
up in the original reports that may be of interest (I tracked this
down after allusions in other discussions to the fact that the dispute
was taken directly to China's central government)...

"Gushan expressed its view to the State Administration of Taxation of
Fujian Province ("Fujian SAT") that its biodiesel, which is produced
from used cooking oil, vegetable oil offal and jatropha oil, should
not be subject to such consumption tax. Gushan was subsequently
informed that Fujian SAT and the Fujian Municipal Finance Bureau
jointly issued a written proposal to the PRC State Administration of
Taxation ("PRC SAT") requesting that biodiesel products without
petroleum-based diesel content be specifically excluded from paying
consumption tax. As of the date of this announcement, the PRC SAT has
not yet replied to this proposal."

I wasn't aware that even the local taxing authority was in favor of
the exemption.  That's hopeful news - I had been under the impression
that Gushan and the Fujian province government were squaring off over
this.