CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Under section 59 of the Customs Act, 1962, an importer files a bill of entry for warehousing, and the duty assessed on the goods is Rs 4,00,000. What is the sum for which the warehousing bond must be executed under section 59(1)?
The bond must be for Rs 12,00,000. Section 59(1) requires the importer to execute a warehousing bond equal to thrice the duty assessed on the goods, and three times Rs 4,00,000 gives Rs 12,00,000.
- ARs 4,00,000, equal to the duty assessed
- BRs 8,00,000, twice the duty assessed
- CRs 12,00,000, thrice the duty assessedCorrect
- DRs 16,00,000, four times the duty assessed
Explanation
Section 59(1) requires a bond in a sum equal to thrice the duty assessed. So 3 x Rs 4,00,000 = Rs 12,00,000. Rs 8,00,000 is wrong because it uses twice the duty, which is not the statutory multiple.
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