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Issues: (i) Whether refund of service tax paid on specified input services used for export was barred for want of compliance with condition (e) of Notification No. 41/2007-ST; (ii) Whether service tax paid on terminal handling charges was eligible for refund under the said notification.
Issue (i): Whether refund of service tax paid on specified input services used for export was barred for want of compliance with condition (e) of Notification No. 41/2007-ST.
Analysis: Condition (e) in the notification bars refund where drawback of service tax paid on the specified services has been availed. The record showed that the exporter had not claimed drawback of service tax on the specified services, but had claimed drawback only of customs duty. The rejection of refund on the ground of breach of condition (e) was therefore based on an incorrect reading of the notification.
Conclusion: The refund claim was not barred by condition (e) and the objection was unsustainable.
Issue (ii): Whether service tax paid on terminal handling charges was eligible for refund under the said notification.
Analysis: The services were used for export of goods, and the Tribunal followed its earlier view that terminal handling charges form part of eligible specified services for which refund is available under Notification No. 41/2007-ST.
Conclusion: Refund of service tax paid on terminal handling charges was allowable.
Final Conclusion: The impugned order rejecting refund was set aside and the exporter was held entitled to the claimed reliefs.
Ratio Decidendi: Refund under Notification No. 41/2007-ST cannot be denied under condition (e) unless drawback of service tax on the specified services has actually been availed, and terminal handling charges are eligible input services for such refund where used for export.
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