CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Meru Components Ltd. files a bill of entry for warehousing, and the goods are assessed to a duty of Rs 4,00,000. Under the Customs Act, 1962, the bond the importer must execute under the warehousing bond provision (Section 59) is for a sum equal to:
The bond must be Rs 12,00,000. Section 59(1) of the Customs Act requires the importer to execute a bond equal to thrice the duty assessed on the goods, and three times Rs 4,00,000 is Rs 12,00,000.
- 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 for a sum equal to thrice the amount of duty assessed. Here 3 x 4,00,000 = Rs 12,00,000. Rs 4,00,000 ignores the multiple, and Rs 8,00,000 uses twice instead of thrice.
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