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Indirect Tax Laws · Warehousing

Warehousing Concept and Warehousing Bond (Section 59), Customs Act, 1962

Updated 5 October 2026 · Fact-checked

Warehousing lets an importer store dutiable imported goods in a licensed customs warehouse without paying duty until the goods are cleared. Before warehousing, the owner executes a bond under Section 59 for twice the duty assessed. To solve a question, identify the warehouse type, total the duties assessed, and multiply that figure by two.

Understand Warehousing Concept and Warehousing Bond (Sec 59)

Normally, import duty is paid before goods leave customs control. Warehousing is an exception. It lets you keep imported goods in a licensed warehouse and defer the duty until you take the goods out for home consumption. Goods you export from the warehouse do not suffer import duty. This helps traders who are not sure of the Indian demand or who plan to re-export.

The Act defines a warehouse as a public warehouse licensed under Section 57, a private warehouse licensed under Section 58, or a special warehouse licensed under Section 58A. Warehoused goods are goods deposited in such a warehouse. The goods stay under customs control, and the warehouse keeper must follow the licence conditions.

The three types differ by who uses them:

  • Public warehouse (Section 57): open to any importer. The licence is granted to the warehouse keeper by the Commissioner of Customs.
  • Private warehouse (Section 58): licensed for storing goods imported by or on behalf of the licensee (the owner), generally in the owner's own premises and subject to the licence conditions. The licence is also granted by the Commissioner of Customs. A manufacturer who imports his own raw material is a typical user.
  • Special warehouse (Section 58A): licensed for specified goods only, such as notified goods. Only those goods may be stored there.

The bond is the safety net for the revenue. Under Section 59, the owner of the goods executes a bond before the goods are warehoused. The bond amount is twice the duty assessed on the goods. The owner binds himself to pay all duties, rent and other charges on the goods, and all penalties and fines for contravening the Act. If he defaults, the department can recover from the bond and its security.

The order of events matters in the exam. The goods are assessed first, the bond is executed, then the proper officer permits the deposit. Later, you can clear the goods for home consumption on payment of duty, or export them. That later stage is covered in the related topics on Sections 64 and 73. Section 85 is a separate provision: it deals with warehousing of imported goods meant as ship's stores, which are for consumption on board vessels and aircraft.

Key rules to remember

Bond amount under Section 59
Bond amount = 2 × duty assessed on the warehoused goods
Duty assessed means the customs duties assessed on the goods. In ICAI-style problems, add BCD, social welfare surcharge, IGST and any other applicable duty. State this assumption in your answer.
Assessable value for IGST on imports (standard working)
IGST base = assessable value + BCD + social welfare surcharge (and any other duty levied under the Customs Tariff Act)
Use this to find the total duty before multiplying by two. Always follow the rates given in the question.
Social welfare surcharge (if applicable)
SWS = 10% × BCD
Apply only where the question says it is leviable. Some goods are exempt.
Meaning of warehouse
Warehouse = public (Sec 57) + private (Sec 58) + special (Sec 58A)
Know who may use each type and which authority licenses it.
What the bond secures
Bond covers: duty + rent + other charges + penalties and fines
The owner binds himself to pay all these, not only the duty.

How to solve Warehousing Concept and Warehousing Bond (Sec 59) questions

Use this order for any theory or case question on warehousing and the Section 59 bond.

  1. 1Read the facts and confirm the goods are imported, dutiable and meant for warehousing, not plain home consumption or temporary storage.
  2. 2Identify the type of warehouse from the facts: general public use (Sec 57), the licensee's own imported goods, generally in own premises (Sec 58), or specified goods (Sec 58A).
  3. 3Check the sequence: assessment of the goods, then execution of the bond, then permission to deposit the goods.
  4. 4If a figure is asked, compute all customs duties assessed in order: BCD, then SWS on BCD, then IGST on the combined base, then any other duty.
  5. 5Apply the rule: bond amount = 2 × total duty assessed. Do not use the goods' value.
  6. 6State what the bond covers: duties, rent, other charges, penalties and fines.
  7. 7Write the conclusion in one line with the figure and the section, and state any assumption you made on rates.

Quickest way: Total duty, double it, name the section

When to use it: Use this for short MCQs and for the numerical part of a case scenario when time is short.

  1. Underline the duty figure the question gives. If it gives only value and rates, compute BCD, SWS and IGST quickly.
  2. Add all duties to get the total duty assessed.
  3. Multiply by 2 to get the bond amount.
  4. Match the user to the warehouse type: anyone, so public; the licensee's own imported goods, so private; specified goods, so special.
  5. Write 'Section 59' beside your answer.

Common mistakes in Warehousing Concept and Warehousing Bond (Sec 59)

  • Taking the bond amount as the value of goods or as the duty itself.

    Students remember that a bond exists but not the multiplier.

    Fix: Write 'twice the duty assessed' at the top of every working and apply it to the total duty only.

  • Leaving IGST out of the duty before multiplying for the bond.

    Students treat IGST as a separate GST item and not as part of customs duty on imports.

    Fix: State the assumption that all duties assessed under customs, including IGST, form the base, and include them in the total.

  • Mixing up the three licence sections, for example calling a private warehouse a Section 57 warehouse.

    The sections are consecutive and look similar.

    Fix: Remember 57 for public, 58 for private, 58A for special. Link private to the licensee's own imported goods.

  • Saying the bond covers only duty.

    Students focus on the duty-deferral purpose of warehousing.

    Fix: List all four items the owner binds himself to pay: duty, rent, other charges, and penalties and fines.

  • Treating warehousing as an exemption from duty.

    Students read 'no duty at the time of warehousing' as 'no duty at all'.

    Fix: Say that duty is deferred and is payable when the goods are cleared for home consumption. Goods exported from the warehouse do not attract import duty.

  • Computing SWS on the assessable value instead of on BCD.

    Students apply the rate to the first number they see.

    Fix: Write 'SWS = 10% of BCD' beside the working and apply it only if the question says it is leviable.

Worked examples

Example 1

Case: Meridian Exports Pvt Ltd imports a consignment and wants to warehouse it in its own factory premises until it decides whether to sell in India or re-export. The duty assessed on the consignment is ₹8,00,000. (a) Which type of warehouse licence is relevant? (b) What bond amount must Meridian execute under Section 59?

Show the solution
  1. Meridian wants to store the goods it imports in its own premises. That fits a private warehouse licensed under Section 58.
  2. The Section 59 bond is for twice the duty assessed.
  3. Duty assessed = ₹8,00,000.
  4. Bond amount = 2 × ₹8,00,000 = ₹16,00,000.
  5. The bond binds Meridian to pay the duty, rent and other charges on the goods, and any penalties and fines for contravention.

Answer: (a) A private warehouse under Section 58. (b) The bond must be for ₹16,00,000, that is, twice the duty assessed.

Example 2

Case: Kavya Industries imports machinery parts with an assessable value of ₹50,00,000. BCD is 10%, social welfare surcharge is 10% of BCD, and IGST is 18%. It plans to warehouse the goods. Assume all these duties are leviable and form the duty assessed. Compute the bond amount under Section 59.

Show the solution
  1. BCD = 10% × ₹50,00,000 = ₹5,00,000.
  2. SWS = 10% × ₹5,00,000 = ₹50,000.
  3. IGST base = ₹50,00,000 + ₹5,00,000 + ₹50,000 = ₹55,50,000.
  4. IGST = 18% × ₹55,50,000 = ₹9,99,000.
  5. Total duty assessed = ₹5,00,000 + ₹50,000 + ₹9,99,000 = ₹15,49,000.
  6. Bond amount = 2 × ₹15,49,000 = ₹30,98,000.

Answer: The bond amount under Section 59 is ₹30,98,000, which is twice the total duty of ₹15,49,000.

Exam tips

  • Numerical questions are usually short. Show the total duty line clearly, because it carries the marks before the multiplication by two.
  • For theory, write the definition of warehouse by listing Sections 57, 58 and 58A, then add one line on who uses each type.
  • In MCQ cases, check whether the user is 'anyone', 'the licensee for goods imported by or for him' or 'specified goods only'. That decides the licence type.
  • State your assumption about whether IGST and SWS are included in the duty. A stated assumption protects your marks.
  • Link the topic with the later stages in one line: after warehousing, the owner can deal with the goods (Sec 64), and the bond is cancelled (Sec 73) once the goods are cleared or exported and the conditions of the bond are satisfied.

Practice questions from Warehousing

Warehousing Concept and Warehousing Bond (Sec 59) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Warehousing Concept and Warehousing Bond (Sec 59): frequently asked questions

What is warehousing under the Customs Act, 1962?

It is the storage of imported dutiable goods in a licensed customs warehouse without paying import duty at the time of import. Duty is paid when the goods are cleared for home consumption. Goods taken out for export do not attract import duty.

What are the types of customs warehouses?

There are public warehouses (Section 57), private warehouses (Section 58) and special warehouses (Section 58A). A public warehouse serves any importer. A private warehouse is licensed for goods imported by or on behalf of the licensee, generally in own premises. A special warehouse stores only specified goods.

How is the warehousing bond amount calculated under Section 59?

The bond amount is twice the duty assessed on the goods. Add up all customs duties assessed, including BCD, SWS and IGST where applicable, and multiply the total by two. The goods' value is not used.

What does the warehousing bond cover?

The owner binds himself to pay the duty, rent and other charges on the goods. He also binds himself to pay any penalties and fines for contravening the Act. This is why the bond protects the revenue.

Is a separate bond needed for every consignment?

Not always. Section 59(2) allows the Commissioner or the proper officer to permit a general bond where goods are deposited in the warehouse at different times. Without such permission, you execute a bond for the goods being warehoused. Check the facts in the question and follow what the question says.