Export bond liability rests on merchant-exporter, not manufacturer, where goods are cleared under the prescribed procedure.

Duty could not be demanded from a manufacturer who cleared goods under bond for supply to merchant-exporters under Notification No. 42/2001-CE(NT). The procedure placed the obligation on the merchant-exporter to obtain the CT-I certificate, execute the bond, complete export within the prescribed time, and bear duty and interest if export was not completed. Because the manufacturer was not responsible for ensuring completion of export formalities, a demand raised against it for alleged non-production of proof of export was unsustainable. The relief was therefore in favour of the assessee.

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Issues: Whether duty could be demanded from the manufacturer for alleged non-production of proof of export when the goods were cleared under bond for supply to merchant-exporters under the procedure in Notification No. 42/2001-CE(NT) dated 26.06.2001.

Analysis: The procedure under the notification required the merchant-exporter to obtain the CT-I certificate, furnish bond, and export the goods within the stipulated period. The responsibility for completing export formalities and for payment of duty and interest upon failure to export rested on the merchant-exporter, not on the manufacturer who had cleared the goods under the prescribed procedure. Since the appellant was not the party charged with ensuring export completion, the demand raised against it could not be sustained.

Conclusion: The duty demand against the appellant was not sustainable and the relief was in favour of the assessee.

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