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

Under Section 59(5) of the Customs Act, 1962, when the whole or part of warehoused goods is transferred by the importer to another person, what must the transferee do?

The transferee must execute his own bond in the manner of Section 59(1) or (2) and furnish the security prescribed under Section 59(3). The importer's continuing bond under Section 59(4) concerns transfer to another warehouse, not transfer of goods to another person.

  1. ANothing, because the importer's bond continues to cover the goods
  2. BExecute a bond as specified in Section 59(1) or (2) and furnish the security under Section 59(3)Correct
  3. CExecute a bond only if the transfer is to a warehouse in another state
  4. DPay the duty immediately and clear the goods for home consumption

Explanation

Section 59(5) requires the transferee to execute his own bond under sub-section (1) or (2) and furnish security under (3). Section 59(4) only says the importer's bond stays in force when goods move to another warehouse, which is a different situation from a transfer to another person.

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