Job work exemption under export-linked notification cannot be denied to the manufacturer for merchant exporter's failure to prove export.

Duty under Notification No. 34/94-CE could not be fastened on a job worker who manufactured textured yarn on behalf of a merchant exporter where the export-linked obligation was placed on the exporter. The notification was read as requiring intended export, and satisfaction of the Assistant Collector, rather than actual export by the manufacturer. Since the export bond and proof-of-export conditions were the merchant exporter's responsibility, failure to furnish export proof could not be shifted to the job worker. On that basis, the duty demand against the job worker was held unsustainable and the exemption remained available on the facts.

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Issues: Whether duty could be demanded from a job worker who manufactured textured yarn under Notification No. 34/94-CE when the merchant exporter allegedly failed to furnish proof of export within the stipulated time.

Analysis: The exemption under Notification No. 34/94-CE applies to textured yarn manufactured from filament yarn imported under the duty exemption scheme, provided it is proved to the satisfaction of the Assistant Collector that the yarn is to be exported or is to be used in the manufacture of goods to be exported out of India. The factual matrix showed that the appellant carried out job work for the merchant exporter, and the export bond obligation under the scheme was on the merchant exporter. The proviso was construed as requiring intended export and satisfaction of the Assistant Collector, not actual export by the job worker. Since the liability for non-compliance with export conditions rested with the merchant exporter, the failure to produce proof of export could not be fastened on the job worker.

Conclusion: The demand of duty against the job worker was not sustainable and the Revenue's appeal was rejected.

Final Conclusion: The exemption was held available on the facts, and the duty liability could not be shifted to the job worker for the exporter's default in fulfilling the export-related conditions.

Ratio Decidendi: Where goods are manufactured on job work basis under an export-linked exemption notification, breach of the export obligation by the merchant exporter fastens liability on the exporter and not on the job worker, if the notification conditions require intended export rather than actual export by the manufacturer.

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