Groundnuts Heated for Storage/Transport Cannot Be Classified under ‘Groundnuts, Not Roasted or Cooked’: AAR [Read Order]

The Rajasthan Authority for Advance Ruling (AAR) has held that groundnuts with shell subjected to heating for reducing moisture content so as to make them suitable for storage and transportation cannot be classified under HSN 1202, which covers “Groundnuts, not roasted or otherwise cooked, whether or not shelled or broken”.

An application was filed by M/s Sitaram Kumhar, who intended to trade in groundnuts purchased from farmers and supplied further to buyers both inter-state and intra-state. The applicant explained that heating was only undertaken to reduce moisture content, thereby preventing spoilage, aflatoxin contamination, and degradation during storage and transport.

He submitted that the process did not alter the fundamental chemical or physical nature of the groundnuts and was distinguishable from roasting or cooking, which involves higher heat leading to charring or significant structural changes. Accordingly, he sought classification under HSN 1202 and the benefit of NIL GST.

The jurisdictional officer, however, countered that heating, even mildness, bears close proximity to roasting and can bring about changes in physical appearance, structure, and composition. It was observed that while natural drying (sun or air drying) is acceptable, the use of artificial heating devices places the process closer to roasting, which is specifically excluded from HSN 1202. The officer also pointed out contradictions in the application, where the applicant sought 5% GST classification initially but prayed for NIL GST under HSN 1202.

After examining submissions, hearing the applicant’s representative, and considering the comments of the jurisdictional officer, the AAR concluded that heating groundnuts to remove moisture amounts to roasting for the purpose of classification.

The authority noted that the applicant had not provided details of the heating process, equipment, or safeguards to show that no structural change occurred. Therefore, it ruled that groundnuts subjected to heating cannot be considered “not roasted or otherwise cooked” and hence fall outside HSN 1202.

Accordingly, the bench of Mahipal Singh and Dr. Akhedan Charan ruled that heating of groundnuts with shell to reduce water content for storage and transportation makes them ineligible to be classified under HSN 1202.

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