Under what specific conditions would the customs authorities agree to destroy the overstocked goods and defective products held by enterprises?

What conditions must be met for customs to approve the destruction of expired or defective goods in a company's possession?

In the course of business operations, companies often encounter situations where imported goods have exceeded their shelf life, have quality defects, or damaged packaging. If these goods are under customs supervision (such as bonded goods or general trade goods for which customs formalities have not been completed), they cannot be destroyed without customs permission. This article, based on the latest laws and regulations such as the *Customs Law of the People's Republic of China*, General Administration of Customs Order No. 273, and General Administration of Customs Announcement No. 79 of 2025, comprehensively outlines the legal conditions and related requirements for customs to approve the destruction of expired and defective goods.

I. General Prerequisites for the Destruction of Customs-Supervised Goods

All supervised goods applying for customs destruction must first meet one core prerequisite: they cannot be sold domestically or returned for any reason.

Customs follows the principle of "domestic sales first, return second, and destruction last" in disposing of supervised goods. If the goods can be sold domestically through normal channels or returned abroad, customs generally will not approve the destruction application. Only when both domestic sales and return are not feasible can a company apply for destruction.

II. Specific Destruction Conditions for Different Types of Goods

(I) Processing Trade Goods (Scrap Materials, Leftover Materials, Defective Products, By-products, and Damaged Bonded Goods)

According to the "Administrative Measures of the Customs of the People's Republic of China on Processing Trade Scrap Materials, Leftover Materials, Defective Products, By-products, and Damaged Bonded Goods" (Revised by Order No. 273 of the General Administration of Customs), the following goods generated by processing trade enterprises may be destroyed if they cannot be sold domestically or returned:

1. Defective products generated during the production process: refers to finished products (including finished and unfinished products) that are seriously defective or fail to meet export contract standards and cannot be re-exported during the production and processing process of processing trade enterprises.

2. Leftover materials exceeding their shelf life or validity period: refers to imported processing trade materials that remain in the process of processing and re-exporting business, which can still be used to process finished products, but cannot be used again due to exceeding their shelf life or validity period.

3. Bonded goods damaged by force majeure: This refers to bonded goods that are damaged, lost, or rendered unusable due to force majeure events such as earthquakes, floods, and fires.

4. By-products prohibited from sale by relevant national departments: This refers to by-products generated by processing trade enterprises during their processing and re-export activities, which are prohibited from sale domestically by relevant national departments.

(II) Cross-border e-commerce bonded import goods (1210 supervision method)

According to General Administration of Customs Announcement No. 79 of 2025 (Announcement on Clarifying Matters Related to the Destruction and Return of Cross-border E-commerce Goods), bonded import goods stored in special customs supervision zones and bonded logistics centers (Type B) may be subject to destruction if they fall under any of the following circumstances and cannot be returned:

1. Goods exceeding their shelf life or expiration date: Such as food, cosmetics, health products, medicines, and other goods with clearly defined shelf life or expiration dates.

2. Goods or packaging damaged and unsaleable: Such as goods damaged during transportation, severely deformed packaging, or labels detached, rendering the goods unsaleable.

3. Goods prohibited from sale by relevant national departments or recalled by enterprises: Such as goods identified as substandard by market supervision departments, ordered to be removed from shelves due to safety hazards, or goods voluntarily recalled by enterprises.

4. Goods unsaleable domestically due to brand, quality, or other reasons: Such as goods whose brand owner terminates authorization, or goods with minor quality issues that do not affect use but cannot be sold normally.

5. Damage caused by force majeure: Such as goods damaged by natural disasters such as fire, flood, or earthquake.

6. Other situations preventing domestic sale: Such as other special circumstances recognized by customs.

(III) Other Bonded Warehouse Goods

Non-processing trade and non-cross-border e-commerce bonded goods (such as general trade bonded warehouse goods) stored in bonded logistics centers and comprehensive bonded zones that cannot be sold domestically or returned due to quality reasons or exceeding their shelf life may be subject to destruction by the competent customs authority. Customs shall handle the disposal of processed trade goods in accordance with the regulations governing their destruction.

(IV) General Trade Imported Goods

For general trade imported goods that have completed customs formalities, paid taxes, and been released, the enterprise has full ownership and can decide to destroy them at its own discretion without applying to Customs.

However, for general trade imported goods that have not completed customs formalities (such as goods that have not yet been declared or are under inspection), if they cannot be imported normally due to quality issues, exceeding their shelf life, etc., the enterprise can apply for direct return; if return is truly impossible, they can be destroyed with Customs approval.

III. Additional Conditions for Customs Approval of Destruction

In addition to meeting the specific circumstances mentioned above, enterprises applying for destruction must also meet the following additional conditions:

1. Entrusting a legally qualified destruction unit: The enterprise must entrust a unit whose business scope listed in its business license as waste treatment or destruction to carry out the destruction. Where laws and administrative regulations have special qualification requirements for the destruction of specific commodities (such as hazardous waste and medical waste), a unit with the corresponding qualifications must be entrusted.

2. Harmless Disposal Methods: The disposal method must comply with national environmental protection requirements, employing harmless methods such as incineration, landfill, dismantling, and pulverization to alter the physical, chemical, and biological characteristics of the goods and ensure no environmental pollution.

3. Accurate Declaration of Disposal Income: If the enterprise obtains income from the disposal (such as selling residues with remaining value after disposal), it must truthfully declare it to Customs. Customs will handle taxation procedures in accordance with the regulations for the domestic sale of scrap materials.

4. Cooperation with Customs Supervision: Customs may send personnel to supervise the disposal process, and the enterprise and the disposal unit must cooperate. The disposal unit must record the entire loading, unloading, and disposal process on video, and retain the records for no less than 3 years.

IV. Circumstances Under Which Customs Will Not Approve Disposal

Customs will not approve the destruction of goods if the enterprise's application for destruction falls under any of the following circumstances:

1. Goods that can be sold domestically or returned: If the goods are of qualified quality and well-packaged, but are unsaleable due to market reasons, Customs will require the enterprise to prioritize domestic sales or return procedures.

2. Waste or goods that are prohibited from import by the State or that pollute the environment: Such goods cannot be declared abandoned or destroyed domestically. Customs will order the consignee or owner of the goods to return them out of the country; if return is not possible, Customs will destroy them under the supervision of the relevant competent authorities, with the costs borne by the consignee.

3. Goods subject to import licenses and for which no license can be provided: If the goods are restricted imports subject to import licenses and the enterprise cannot provide the corresponding licenses, Customs will not approve domestic sales or destruction and will require the enterprise to return them out of the country.

4. Enterprises failing to truthfully declare the goods: If an enterprise conceals the true value, quantity, or quality of the goods, or provides false supporting documents, Customs will not approve the destruction application and will pursue the enterprise's legal liability according to law.

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