CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Mehta Alloys Ltd has executed a section 59 bond for goods in a warehouse. It transfers all the goods to another warehouse, with no part transferred to another person. What is the effect of the transfer on the bond?
The bond continues in force. Under section 59(4), a bond executed by the importer remains valid even when the goods are transferred to another warehouse, so no fresh bond is needed from the same importer.
- AThe bond lapses and a fresh bond must be executed
- BThe bond continues in force despite the transfer to another warehouseCorrect
- CThe bond is cancelled once the goods are transferred
- DThe bond continues only if the transfer is made to a public warehouse
Explanation
Section 59(4) states that a bond executed by an importer continues in force notwithstanding the transfer of the goods to another warehouse. The importer need not execute a fresh bond. Option 3 confuses this with section 73, which applies when goods are fully accounted for, not merely moved.
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