Abatement of duty on damaged or deteriorated goods [Section 22] :
Where it is shown to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs –
(a) that any imported goods had been damaged or had deteriorated at any time before or during the unloading of the goods in India; or
(b) that any imported goods, other than warehoused goods, had been damaged at any time after the unloading thereof in India but before their examination under section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employee or agent; or
(c) that any warehoused goods had been damaged at any time before clearance for home consumption on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent,
such goods shall be chargeable to duty in accordance with the provisions of sub -section (2) [Sub-section (1)].
The duty to be charged on the goods referred to in sub-section (1) shall bear the same proportion to the duty chargeable on the goods before the damage or deterioration which the value of the damaged or deteriorated goods bears to the value of the goods before the damage or deterioration [Sub-section (2)].
For the purposes of this section, the value of damaged or deteriorated goods may be ascertained by either of the following methods at the option of the owner: –
(a) the value of such goods may be ascertained by the proper officer, or
(b) such goods may be sold by the proper officer by public auction or by tender, or with the consent of the owner in any other manner, and the gross sale proceeds shall be deemed to be the value of such goods [Sub-section (3)].
Analysis
(a) Cases where the abatement is available
Abatement is available if the goods are damaged/deteriorated under any of the following circumstances:
| S.No. | Goods damaged/deteriorated | |
| 1 | before or during unloading | |
| 2 | by accident after unloading but before examination for assessment by the customs authorities | Provided such accident is not due to any wilful act, negligence or default of the importer, his employee or agent |
| 3 | by accident in warehouse before their actual clearance from such warehouse |
| Meaning of damage
The term “damage‟ denotes physical damage to the goods. This implies that the goods are not fit to be used for the purpose for which they are meant. Meaning of deterioration Deterioration is reduction in quality of goods due to natural causes. |
(b) Amount of duty chargeable after abatement
= Duty on goods before damage/deterioration * Value of damaged/deteriorated goods / Value of goods before damage/deterioration
Illustration: If the value of goods is ` 10,000 and after damage the value is ` 2,000 then duty payable on ` 10,000/- should be appropriately reduced to 20% (proportion of 2000 to 10000).
(c) *Valuation of the damaged or deteriorated goods
The value shall be:-
(a) Value ascertained by the proper officer
or
(b) The proper officer may sell such goods by public auction/tender or if the importer agrees, in any other manner and the gross sale proceeds shall be deemed to be the value of such goods.