CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Bharat Metals Ltd. files a bill of entry for warehousing, and the duty assessed on the goods is Rs. 4,00,000. Under the Customs Act, 1962, the warehousing bond executed under Section 59(1) must be for a sum equal to:
The bond must be for thrice the assessed duty, so Rs. 12,00,000. Section 59(1) fixes the bond amount at three times the duty assessed on the goods covered by the bill of entry for warehousing, not the duty amount itself or twice that figure.
- ARs. 4,00,000, being the duty assessed
- BRs. 8,00,000, being twice the duty assessed
- CRs. 12,00,000, being thrice the duty assessedCorrect
- DRs. 16,00,000, being four times the duty assessed
Explanation
Section 59(1) requires a bond equal to thrice the duty assessed. Here 3 x 4,00,000 = Rs. 12,00,000. Twice the duty is wrong because it uses the wrong multiple.
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