Export service tax refund cannot be denied for duty drawback claims where drawback excludes input services; factual transport linkage was remanded.

Refund of service tax on export-linked services under Notification No. 41/2007-ST cannot be denied merely because duty drawback was claimed, where the drawback computation does not include the input service component and the record shows tax-paid export-related services such as inland haulage, CHA and clearing and forwarding services. On those facts, denial of refund for the port-linked services was held unsustainable. However, where the refund claim for road transport from the factory to the ICD turned on factual correlation between invoices and movement of export goods, the matter required verification and was remanded to the adjudicating authority.

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Issues: (i) Whether refund of service tax on export-related services could be denied on the ground that the assessee had claimed duty drawback and that the services were not covered by port services. (ii) Whether refund in relation to road transport service from the factory to the ICD could be denied for want of correlation between the invoices and the transportation of export goods.

Issue (i): Whether refund of service tax on export-related services could be denied on the ground that the assessee had claimed duty drawback and that the services were not covered by port services.

Analysis: The refund under Notification No. 41/2007-ST was claimed for services used in export of goods. The available clarification and the earlier decision relied upon showed that drawback computation did not include the input service component, and therefore the services used for export were not part of the drawback claim. The Tribunal further treated inland haulage, CHA and clearing and forwarding services, on the facts of the case, as services availed at the port for export purposes and held that denial of refund on the ground that duty drawback had been claimed was not sustainable. The invoices on record also evidenced payment of service tax.

Conclusion: Refund could not be denied on the ground of duty drawback, and the denial of refund for the export-related port services was set aside in favour of the assessee.

Issue (ii): Whether refund in relation to road transport service from the factory to the ICD could be denied for want of correlation between the invoices and the transportation of export goods.

Analysis: The objection was confined to verification of the linkage between the service provider's invoices and the transportation of goods from the factory to the port for export. Since the factual correlation was not finally established on the record, the matter required verification by the adjudicating authority.

Conclusion: The issue was remanded for verification of the relevant documents and invoices.

Final Conclusion: The assessee succeeded on the substantial refund issues relating to duty drawback and port-linked export services, while the road transport claim was sent back for factual verification.

Ratio Decidendi: Refund of service tax on export-linked services cannot be denied merely because duty drawback has been claimed if drawback does not include the input service component, and factual correlation disputes may be remanded for verification.

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