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CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond

Kaveri Traders executed a bond under Section 59 for goods warehoused in Warehouse A. Later the goods are shifted to Warehouse B, still held by Kaveri Traders. As per Section 59(4), the position of the bond is that:

The bond continues in force. Section 59(4) provides that a bond executed by the importer remains valid even when the goods are transferred to another warehouse, so no fresh bond is needed for a mere change of warehouse.

  1. AIt lapses and a fresh bond must be executed for Warehouse B
  2. BIt continues in force despite the transfer of the goods to another warehouseCorrect
  3. CIt continues only if the Commissioner issues a fresh order
  4. DIt is reduced to the proportion of duty on the goods remaining in Warehouse A

Explanation

Section 59(4) states 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 where goods go to another person under 59(5), not for a mere shift of warehouse.

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