A coffee importer has received 800 bags of green coffee beans from Colombia. The goods are held in a bonded warehouse near a UK port while customs checks th...
Question 1 Report
A coffee importer has received 800 bags of green coffee beans from Colombia. The goods are held in a bonded warehouse near a UK port while customs checks the shipment. The importer has not yet decided whether to sell the beans to UK retailers or re-export them to another country.
(a) State what is meant by a bonded warehouse. [2]
(b) Identify the payment that can be delayed while goods are kept in this type of warehouse. [1]
(c) Give three reasons why using the bonded warehouse is useful to this importing business. [3]
Answer Details
(a) A bonded warehouse is a warehouse approved or controlled by customs in which imported goods may be stored before import/customs duty is paid. Both parts are needed for the definition. [2]
(b) The payment that can be delayed is customs duty, also called import duty or import tax. [1]
(c) This warehouse is useful because:
- Duty payment can be postponed, improving the importer’s cash flow because money is not paid immediately.
- The beans can be held securely while customs documents and checks are completed.
- The importer can wait before deciding whether to sell in the UK or re-export.
- If the beans are re-exported, import duty may be avoided.
Any three valid reasons gain credit. [3]
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