Sections 73 and 73A explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 73 tells you when the proper officer must cancel a warehousing bond and hand it back, and section 73A says who has custody of warehoused goods and what happens if the goods are removed wrongly. Together they close the loop on a warehousing cycle: goods come in under a bond, stay in the licensee's custody, and the bond is discharged once everything is cleared and paid for. This article explains both as printed in the text on the CBIC portal updated to 30 March 2022.
When all the goods covered by a bond under section 59 have been cleared for home consumption, exported, transferred or otherwise duly accounted for, and all amounts due on them have been paid, the proper officer shall cancel the bond as discharged in full and deliver it on demand (section 73). All warehoused goods remain in the custody of the licensee under section 57, 58 or 58A until cleared, transferred, exported or removed as the Act provides (section 73A). If goods are removed in contravention of section 71, the licensee is liable to pay duty, interest, fine and penalties.
The text consulted is the CBIC copy last updated on 30 March 2022 (the Act as amended up to the Finance Act, 2022). Later Finance Acts may have changed these sections, so check them before acting.
The place of these sections in Chapter IX
Chapter IX of the Act covers warehousing. A person who warehouses goods executes a bond under section 59 (the copy prints a section 59A as omitted). The bond is the legal promise on which the goods are held. The ordinary exits for goods are explained in our article on sections 68 and 69, and what happens when goods leave the wrong way is in sections 70 to 72. For the full chapter see our overview of customs bonded warehouses, sections 57 to 73.
If you are planning a licensed facility, our page on the private bonded warehouse licence explains how we assist.
Section 73: cancellation and return of the warehousing bond
Section 73 is headed "Cancellation and return of warehousing bond". It sets two conditions and then a duty on the officer.
Condition 1: the goods are dealt with. The whole of the goods covered by any bond executed under section 59 have been:
- cleared for home consumption, or
- exported, or
- transferred, or
- otherwise duly accounted for.
The word "transferred or" was inserted with effect from 14-5-2016 by section 136 of the Finance Act, 2016 (28 of 2016), so transfer to another warehouse now counts as a way of discharging the bond. The text speaks of the whole of the goods covered by the bond: a part-cleared bond is not discharged.
Condition 2: the money is paid. All amounts due on account of such goods have been paid.
The officer's duty. When both conditions are met, the proper officer shall cancel the bond as discharged in full, and shall on demand deliver it, so cancelled, to the person who executed it or is entitled to receive it. The word is "shall", so cancellation is not a favour; it follows as of right once the two conditions are satisfied. Delivery of the cancelled bond depends on a demand by the person entitled.
The section refers to a bond under "section 59" and the footnotes record that the reference was substituted with effect from 23-12-1991 by the Customs (Amendment) Act, 1991 (55 of 1991), and that the words "or section 59A" were omitted with effect from 13-5-1994 by section 60(5) of the Finance Act, 1994 (32 of 1994).
| Question | Answer from the text |
|---|---|
| Who cancels the bond? | The proper officer |
| When? | When the whole of the goods covered are cleared, exported, transferred or otherwise duly accounted for, and all amounts due are paid |
| Is cancellation optional? | No, the text says "shall" |
| To whom is the bond handed back? | The person who executed it or is entitled to receive it, on demand |
Example. Brightwell Chemicals Pvt Ltd executed a bond for a consignment. Half was cleared for home consumption, a quarter was exported and a quarter moved to another warehouse. All duty and charges due are paid. The whole of the goods is now cleared, exported or transferred, so the proper officer must cancel the bond and give it back to Brightwell on demand.
Section 73A: custody and removal of warehoused goods
Section 73A was inserted with effect from 14-5-2016 by section 137 of the Finance Act, 2016 (28 of 2016). It has three sub-sections.
Sub-section (1): who holds the goods. All warehoused goods remain in the custody of the person who has been granted a licence under section 57 or section 58 or section 58A, until they are:
- cleared for home consumption, or
- transferred to another warehouse, or
- exported, or
- removed as otherwise provided under the Act.
Sub-section (2): responsibilities. The responsibilities of the person who has custody are such as may be prescribed. The Act does not list them.
Sub-section (3): wrongful removal. Where any warehoused goods are removed in contravention of section 71, the licensee is liable to pay duty, interest, fine and penalties, without prejudice to any other action that may be taken against him under the Act or any other law for the time being in force.
Compare this with section 72, which lets the proper officer demand the duty from the owner of the goods in the same situation. Section 73A(3) makes the licensee liable. The text does not say that the two liabilities cancel each other, and this article does not add any such rule. The facts of each case decide who is called upon.
The regulations that implement section 73A
The Warehouse (Custody and Handling of Goods) Regulations, 2016 cite section 73A(2) among the powers under which they were made. The copy consulted for this series is dated 1 October 2019 (that is the date of that file, not of the Act text). It is the place to look for the prescribed responsibilities; this article does not set out any of them.
Practical points for licensees
- Discharge the bond deliberately. Check that every unit covered by the bond is accounted for, and that every amount due has been paid, before asking for cancellation.
- Ask for the cancelled bond. Section 73 delivers the bond on demand, so make a written demand and keep the record.
- Treat custody as a continuing responsibility. Under section 73A(1) the goods remain with the licensee until a lawful exit happens.
- Guard the gate. Wrongful removal under section 71 exposes the licensee to duty, interest, fine and penalties under section 73A(3).
- Keep systems and staff ready for the prescribed responsibilities. Check the regulations for what they require.
The licensee's wider rights and duties around the stock, including inspection and sorting, are covered in sections 64, 66 and 67.
Need help with a bonded warehouse licence?
If your business holds or is applying for a bonded warehouse licence, we can help you understand the custody duties and the bond cycle before you start. See our private bonded warehouse licence page.
Key takeaways
- Section 73 requires the proper officer to cancel a warehousing bond once all goods under it are cleared, exported, transferred or duly accounted for and all amounts due are paid.
- The cancelled bond is delivered on demand.
- Under section 73A, warehoused goods stay in the custody of the section 57, 58 or 58A licensee until a lawful exit.
- The licensee's responsibilities are as may be prescribed.
- A licensee is liable for duty, interest, fine and penalties if goods are removed in contravention of section 71.
- Later Finance Acts may have changed these sections; check before acting.
Read next
- Sections 70 to 72: volatile goods and goods improperly removed
- Sections 68 and 69: clearance of warehoused goods
- Customs Bonded Warehouse: Sections 57 to 73
- Customs Bonded Warehouse: types and procedure
Disclaimer: Based on the Customs Act, 1962 as published on the CBIC Tax Information Portal, updated to 30 March 2022 (amended up to the Finance Act, 2022), as consulted on 2 October 2026. Finance Acts of 2023 and later, and the current rules, regulations and notifications, should be checked. This article is general information, not legal advice; check the official text before acting.