CA Final · Indirect Tax Laws · Warehousing
Arya Imports executed a bond under section 59 for goods warehoused in Warehouse A. The goods are moved to Warehouse B, with the same importer retaining ownership. What is the effect on the bond?
The bond continues in force. Section 59(4) states that a bond executed by the importer for goods stays valid even when the goods are transferred to another warehouse. A new bond arises only if the goods pass to another person.
- AThe bond lapses and a fresh bond is needed for Warehouse B
- BThe bond continues in force despite the transfer to another warehouseCorrect
- CThe bond is reduced to one-third of its sum
- DThe bond must be cancelled and the duty paid immediately
Explanation
Section 59(4) provides that a bond executed by an importer continues in force notwithstanding the transfer of the goods to another warehouse. A fresh bond is needed only when the goods go to another person, under section 59(5).
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