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CA Final · Indirect Tax Laws · Warehousing

Kaveri Traders has warehoused imported goods under a bond executed under section 59. It transfers all the goods to another warehouse. Which statement is correct under section 59?

The bond continues in force. Section 59(4) provides that a bond executed by an importer for goods remains valid notwithstanding transfer of those goods to another warehouse, so no fresh bond is required for the transfer and no same-city condition applies.

  1. AThe bond lapses and a fresh bond is required from the same importer
  2. BThe bond continues in force despite the transfer of goods to another warehouseCorrect
  3. CThe bond is cancelled and security is refunded immediately
  4. DThe bond continues only if the transfer is to a warehouse in the same city

Explanation

Section 59(4) says a bond executed by an importer continues in force notwithstanding the transfer of the goods to another warehouse. No fresh bond is needed, and there is no location restriction in the text.

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