Service tax refund for export-linked port services was denied where goods were cleared under drawback under the notification.

Refund of service tax on specified port services used for exports was treated as unavailable where the exported goods were cleared under drawback, because condition 1(e) of the first proviso to Notification No. 41/2007-ST excludes refund in such cases. The Tribunal followed its earlier Division Bench view and declined to prefer earlier Single Member decisions allowing refund, treating the exclusionary condition as mandatory. The operative effect is that exports made under drawback do not qualify for the refund benefit for the covered services.

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Issues: Whether refund of service tax on specified port services used for export was admissible when the exported goods were cleared under drawback and thus failed to satisfy condition 1(e) of the first proviso to Notification No. 41/2007-ST dated 06.10.2007.

Analysis: The refund claims were governed by Notification No. 41/2007-ST dated 06.10.2007, which permitted refund of service tax on services used in relation to export subject to fulfilment of stipulated conditions. One such condition barred refund where the exported goods had been exported after availing drawback of the service tax paid on the specified services. The Tribunal followed its earlier Division Bench decision, which had already considered and rejected the same contention, and held that exports made under drawback do not satisfy the condition precedent for refund. Earlier Single Member decisions allowing refund were not preferred over the later Division Bench view.

Conclusion: The refund claim was not admissible because export under drawback violated condition 1(e) of the notification.

Final Conclusion: The assessees' appeals failed and the Revenue's appeals succeeded, as refund of service tax on the disputed exports was denied.

Ratio Decidendi: Refund under an exemption notification is unavailable where a specifically prescribed exclusionary condition is not satisfied, and exports made under drawback cannot claim the same refund benefit for the covered services.

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