CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Bharat Steels executed a bond under section 59 for goods in warehouse A, and later moved all of the goods to warehouse B. What is the position of the bond under section 59(4)?
The bond continues in force. Section 59(4) states that a bond executed by the importer remains valid even if the goods are transferred to another warehouse, so no fresh bond is required for the move alone.
- AThe bond lapses and a fresh bond is required for warehouse B
- BThe bond continues in force despite the transfer of the goods to another warehouseCorrect
- CThe bond continues only if the duty is paid first
- DThe bond continues only for half the goods
Explanation
Section 59(4) says a bond executed by an importer continues in force notwithstanding the transfer of the goods to another warehouse. A fresh bond is needed only where goods are transferred to another person, under section 59(5), not merely to another warehouse.
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