HSN code for change in Paddy straw

[KARAN VERMA]

Sir, I m buying paddy straw for HSN 1213 (0 %), then my process is cutting of such bulk rolls of paddy straw into small pieces and sold such cutting paddy straw to other party for use as boiler fuel.

My question is whether above cutting process lead to change in HSN code and GST rate.

[Rajagopalan Ranganathan]

Sir,

Cutting of paddy straw into small pieces does not result in emergence of a new product which is different from paddy straw. The cutting of paddy straw does not amount to processing and after cutting paddy straw remains as paddy straw only. The same is classifiable under HSN 12.13 and attracts nil tax. This is my opinion.

[Ganeshan Kalyani]

I agree with the views of Sri Rajagoplan Sir.

[KASTURI SETHI]

In support of views of both experts, see authority in the form of C.B.I. & C. Circular F. No. 332/2/2017-TRU, dated December, 2017 (Serial No. 19).

[KARAN VERMA]

Thanks to all.

AI Summary

HSN classification change denied as simple cutting of paddy straw does not alter its classification and nil GST applies. Cutting paddy straw into small pieces is a mere physical size-reduction that does not produce a new commodity; it therefore does not change the HSN classification and the supply continues to attract nil GST treatment, consistent with administrative circular guidance.