CA Final · Indirect Tax Laws · Warehousing
Sundaram Exports executed a bond under section 59 for three consignments warehoused in one warehouse. Consignment 1 was cleared for home consumption and consignment 2 was exported, with all dues paid on both. Consignment 3 was transferred in full to Rao Industries, which has executed its own bond. Part of consignment 3 was found short and has not been duly accounted for. Can the proper officer cancel Sundaram's bond under section 73?
No, the bond cannot be cancelled. Section 73 permits cancellation only when the whole of the goods under the bond have been cleared, exported, transferred or otherwise duly accounted for and all dues paid. The unaccounted shortage in consignment 3 means this condition is not satisfied.
- AYes, because consignments 1 and 2 were cleared and exported and all dues paid
- BYes, because transfer to Rao Industries discharges the bond even if some goods are unaccounted
- CNo, because the whole of the goods covered by the bond must be cleared, exported, transferred or otherwise duly accounted for, and the shortage is not accounted forCorrect
- DNo, because a bond can be cancelled only when the goods are cleared for home consumption
Explanation
Section 73 requires the whole of the goods covered by the bond to be cleared for home consumption, exported, transferred or otherwise duly accounted for, and all amounts due to be paid. The part of consignment 3 that is short is unaccounted, so the condition fails. Option B ignores the word whole, and option D ignores export, transfer and duly accounted for.
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