Export duty demand cannot be fastened on manufacturer when merchant-exporter undertakes the export obligation and proof of export.

Where goods were cleared for export through a merchant-exporter under AR-4s, the export obligation and proof of export requirement lay with the merchant-exporter who had undertaken that commitment. On those facts, the duty demand could not be fastened on the manufacturer-appellant, and the department was required to proceed against the merchant-exporter in terms of the bond executed before the Maritime Commissioner. In the absence of a legal basis to recover duty from the manufacturer, the consequential penalty also failed and was set aside.

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Issues: Whether duty demand arising from goods cleared for export through a merchant-exporter could be fastened on the manufacturer-appellant when the export obligation was undertaken by the merchant-exporter.

Analysis: The goods were cleared for export under AR-4s through a merchant-exporter, and the export commitment was stated to have been undertaken by that merchant-exporter. On those facts, the obligation to complete the export and to produce proof of export lay with the merchant-exporter, and the department was required to proceed against the merchant-exporter in terms of the bond executed before the Maritime Commissioner. In the absence of a basis to recover the duty from the appellants, the duty demand and consequential penalty could not be sustained against them.

Conclusion: The duty demand and penalty were not sustainable against the appellants and were set aside.

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