Refund under export service tax notification barred by drawback claim; later deletion of eligibility condition held non-retrospective.

A refund of service tax under Notification No. 41/2007-ST was unavailable where the exported goods had been cleared under claim of drawback, because non-availment of drawback was a condition precedent for eligibility. The appellant's drawback claim on the FOB value of the exported goods meant the refund condition was not satisfied, and the later deletion of that condition did not operate retrospectively. The notification had to be applied as it stood during the relevant period, so the refund claims failed.

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Issues: (i) Whether refund of service tax under Notification No. 41/2007-ST was admissible when the exported goods were cleared under claim of drawback; (ii) whether deletion of condition (e) from the notification operated retrospectively for the relevant period.

Issue (i): Whether refund of service tax under Notification No. 41/2007-ST was admissible when the exported goods were cleared under claim of drawback.

Analysis: The notification granted refund of service tax paid on specified services used in connection with export, but only where the goods had not been exported under claim of drawback. The appellants had admittedly claimed drawback on the FOB value of the exported goods, and the value of the disputed services formed part of that value. The claim that the drawback rate was fixed without separately considering those services did not alter the operation of the notification condition. The cited earlier decision was distinguished on the ground that in that case no drawback of service tax on specified services had been claimed.

Conclusion: The refund claim was not admissible and was rightly rejected.

Issue (ii): Whether deletion of condition (e) from the notification operated retrospectively for the relevant period.

Analysis: The deleted condition was a substantive eligibility requirement of the notification during the relevant period. Its later deletion reflected a change in the legal regime and could not be treated as merely clarificatory. The benefit of the notification had to be tested by the conditions as they existed when the refund claims arose.

Conclusion: The deletion did not operate retrospectively and gave no relief for the earlier period.

Final Conclusion: The refund claims failed because the drawback condition in the notification was not satisfied and the later deletion of that condition did not apply to the period in dispute.

Ratio Decidendi: Where a refund notification makes non-availment of drawback a condition precedent, refund is barred if drawback has been claimed on the exported goods for the relevant period, and a later deletion of that condition is not retrospective unless expressly so provided.

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