CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Prakash Metals Ltd. files a bill of entry for warehousing, and the goods are assessed to customs duty of Rs 4,00,000. Under the warehousing bond provision of the Customs Act, 1962, what is the minimum amount for which the importer must execute a bond for these goods (ignoring any general bond)?
The bond must be for 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 warehoused goods, and three times Rs 4,00,000 gives Rs 12,00,000.
- ARs 4,00,000
- BRs 8,00,000
- CRs 12,00,000Correct
- DRs 16,00,000
Explanation
Section 59(1) requires a bond in a sum equal to thrice the duty assessed. Working: 3 x Rs 4,00,000 = Rs 12,00,000. Rs 8,00,000 uses twice the duty and Rs 4,00,000 uses the duty itself, so both are wrong multiples.
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