System of rules abused in Rangoon (7)
I believe the answer is:
organon
'system of rules' is the definition.
(system or set of logical principles)
'abused in rangoon' is the wordplay.
'abused in' indicates anagramming the letters (the letters are abused or damaged).
'rangoon' with letters rearranged gives 'ORGANON'.
(Other definitions for organon that I've seen before include "Set of principles" , "system for acquiring knowledge" , "system of logic" .)