Warehousing Bond [Section 59]:
Section 59 provides as follows:
(1) The importer of any goods, specified in sub-section (1) of section 61, which have been entered for warehousing and assessed to duty under section 17 or section 18, shall execute a bond binding himself in a sum equal to twice the amount of duty assessed on such goods,
(a) to observe all the provisions of this Act and the rules and regulations in respect of such goods;
(b) to pay on or before a date specified in a notice of demand
(i) all duties, and interest if any, payable under sub-section(2) of section 61;
(ii) rent and charges claimable on account of such goods under this Act, together with interest on the same from the date so specified at such rate not below eighteen percent and not exceeding thirty six percent per annum as is for the time being fixed by the central government by Notification in the Official Gazette, and
(iii) to discharge all penalties incurred in violation of the provisions of this Act and the rules and regulations in respect of such goods.
(2) For the purpose of sub-section (1) the Assistant Commissioner or Deputy Commissioner of Customs may permit an importer to enter into a general bond in such amount as the Assistant Commissioner of Customs may approve in respect of the warehousing of goods to be imported by him within a specified period.
(3) A bond executed under this section by an importer in respect of any goods shall continue in force notwithstanding the transfer of the goods to any other person or the removal of the goods to any other warehouse;
However, where the whole of the goods or any part thereof are transferred to another perso n, the proper officer may accept a fresh bond from the transferee in a sum equal to twice the amount of duty assessed on the goods transferred and thereupon the bond executed by the transferor shall be enforceable only for a sum mentioned therein less the amount for which a fresh bond is accepted from the transferee.
The double duty indemnity bond plays a very important role in the entire concept of warehousing.
The rate of duty and valuation prevalent on the date of removal are applicable in terms of section 15(1) for piecemeal clearances. Normally the rates of customs duty have been generally increasing. Therefore there has been no risk of loss of revenue on account of warehousing. Hence allowing for increase in duty rates, it was considered sufficient to cover double the duty amount by an indemnity bond with necessary surety or security. This is basically the underlying objective of the warehousing bond.
Determination of the bond amount: Subsection (2) specifies that instead of an individual
double duty bond for each consignment, the importer may be permitted to file a general bond
to cover imported goods to be warehoused by him during a particular period. The bond
amount will be determined by the Assistant Commissioner of Customs, having regard to the
(a) Past imports warehoused and the duty involved in such consignments;
(b) Anticipated imports and expected revenue involved.
In practice, a running account is maintained with debit when imported goods are warehoused and credits when warehoused goods are cleared ex-bond on payment of duty. There is a concept that as long as the goods are available to customs duty leviable thereon, the duty can be recovered from sale of goods. In fact 72(2) provides for such a coercive method for the realization of duty.
Notification fixing higher rate of interest: Under Notification No 35/2000-Cus (NT). dated 12.05.2000, the Central Board of Excise and Customs has fixed the rate of interest at 24% per annum, for the purposes of sub-clause (ii) of clauses (b) of sub-section (1) of section 59 of the Customs Act.