CA Final · Indirect Tax Laws · Warehousing
Surya Chemicals warehoused goods under a bond executed under section 59. It later transfers all the goods to another warehouse, still in its own name as importer. What is the effect on the bond under the Customs Act, 1962?
The bond continues in force. Section 59(4) of the Customs Act, 1962 provides that a bond executed by an importer for goods remains valid even if the goods are moved to another warehouse, so no fresh bond is needed merely for that transfer.
- AThe bond lapses and a fresh bond must be executed
- BThe bond continues in force despite the transfer of the goods to another warehouseCorrect
- CThe bond continues only if the duty is paid first
- DThe bond is reduced to twice the duty
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 lapse option wrongly treats a warehouse change as ending the bond.
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