Skip to content

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

Shakti Polymers imported materials worth duty Rs 60 lakh and stores them in a warehouse. The goods were cleared for home consumption, except 10% of the goods, which were lost and not accounted for; all dues on the cleared goods were paid. Considering Section 73, the proper officer:

The officer cannot cancel the bond as discharged in full. Section 73 requires the whole of the goods to be cleared, exported, transferred or duly accounted for and all dues paid, and 10% remains unaccounted for.

  1. AMust cancel the bond as discharged in full since duty on cleared goods is paid
  2. BMust cancel the bond proportionately to 90% of the goods
  3. CCannot cancel the bond as discharged in full until the whole of the goods is cleared, exported, transferred or otherwise duly accounted for and all dues are paidCorrect
  4. DMust cancel the bond once the Rs 60 lakh duty equals the bond amount

Explanation

Section 73 allows cancellation as discharged in full only when the whole of the goods covered by the bond has been cleared, exported, transferred or otherwise duly accounted for and all amounts due are paid. 10% remains unaccounted, so the condition fails. The Act does not provide for proportionate cancellation.

Did you get it right without looking?

One question tells you little. A timed set on Manufacture in Bond shows your real accuracy, how long you take and where you lose marks.

Practise Manufacture in BondFree diagnostic mock

More Manufacture in Bond questions