Theory question 104
WarehousingCommerce 2 (answer five questions)
(a) What is a Bonded Warehouse?
(b) State four ways in which a bonded warehouse may be useful in international trade
Show the model answer
(a) A bonded warehouse is a warehouse, approved and supervised by the customs authority, where imported goods on which duty has not been paid are kept until the duty is paid or the goods are re-exported.
(b) Any four: the importer pays duty only when he takes goods out, in instalments, so his capital is not tied up; goods meant for re-export (entrepot trade) can be re-exported without paying duty; goods can be blended, packed, sorted or graded while in bond; buyers can inspect samples there; goods are kept safe under customs watch; government revenue is protected.
Stress that duty is unpaid while goods are in bond.