Merchant export non-compliance did not justify duty and penalty against the manufacturer under export bond conditions.

Goods cleared under bond for export through a merchant exporter remained eligible under Notification No. 42/2001-C.E. (N.T.) where the notification permitted such export routing. The merchant exporter's failure to export the goods within the stipulated six-month period did not, by itself, justify fastening duty liability on the manufacturer. On the stated facts, the demand for duty and penalty against the manufacturer was unsustainable because the export-condition default was attributable to the merchant exporter, not the manufacturer.

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Issues: Whether duty and penalty could be confirmed against the manufacturer when goods cleared under bond for export through a merchant exporter were not exported within the prescribed period, and the export condition under Notification No. 42/2001-C.E. (N.T.) dated 26-6-2001 was not fulfilled by the merchant exporter.

Analysis: The goods were cleared by the manufacturer for export through a merchant exporter under the notification. The condition of export within six months was not fulfilled by the merchant exporter. The Notification permits export through a merchant exporter, and the failure of the merchant exporter to export the goods within the stipulated period does not justify fastening the duty liability on the manufacturer. The demand against the manufacturer was therefore unsustainable.

Conclusion: Duty and penalty could not be demanded from the manufacturer for the merchant exporter's failure to complete export within the prescribed time.

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