In cases like this, shortage adjustments are generally treated as a commercial adjustment/expense rather than supply of goods or services. You can issue a credit note for the 10 kg shortage without assigning a separate HSN code for “shortage expenses,” since no fresh supply is involved. Use the same HSN as geometry dash and the original item (cotton) when raising the credit note, and show it as a value adjustment. It’s best to confirm with your tax advisor to align with GST compliance.