Customs duty on deteriorated re-imported goods must be tested under abatement rules, not general destruction provisions.

Re-imported goods that had deteriorated because of short shelf life were held to require examination under the Customs Act abatement framework, not under a general Foreign Trade Policy destruction provision. The remission provision for lost or destroyed goods was inapplicable because the goods were neither lost nor destroyed. The relevant question was whether abatement could be granted for damaged or deteriorated goods and, if so, whether duty should be assessed on their reduced or nil commercial value. The existing duty demand was not finally sustainable on the record and the matter had to be reconsidered by the original authority under the abatement provision.

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Issues: Whether duty on re-imported goods that had deteriorated due to short shelf life could be demanded under the Customs law, or whether the matter had to be examined under the provisions relating to abatement or remission of duty.

Analysis: The Foreign Trade Policy provision permitting destruction of goods without duty did not by itself abate customs duty liability. Re-imported goods had to be treated as imported goods, and the duty position had to be examined under the Customs Act and the applicable notification. The provision for remission of duty on lost or destroyed goods was not attracted because the goods were neither lost nor destroyed. The provision for abatement on damaged or deteriorated goods was relevant because the goods had deteriorated and were unfit for marketing. The duty, if any, therefore had to be worked out on the basis of the value of the deteriorated goods, and the assessee was entitled to establish that the goods had no commercial value.

Conclusion: The duty demand could not be finally sustained on the existing record and the matter was required to be reconsidered by the original authority under the abatement provision.

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