CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Under the Customs Act, 1962, an importer files a bill of entry for warehousing, and duty of ₹8,00,000 is assessed on the goods. What is the minimum amount of the bond the importer must execute under the warehousing bond provision (Section 59(1))?
The bond must be ₹24,00,000, because Section 59(1) requires the importer to execute a bond equal to thrice the duty assessed on the warehoused goods. Three times ₹8,00,000 gives ₹24,00,000. Bonds of one or two times the duty fall short of the statutory requirement.
- A₹8,00,000
- B₹16,00,000
- C₹24,00,000Correct
- D₹32,00,000
Explanation
Section 59(1) requires a bond in a sum equal to thrice the duty assessed. Thrice of ₹8,00,000 is ₹24,00,000. Twice the duty (₹16,00,000) is wrong because the section says thrice, and the duty amount alone would not satisfy the requirement.
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