Strict construction of export-service refund notification bars manufacturer from claiming refund for tax paid on another party's port services.

A refund notification for service tax on port services used for export was construed strictly as an exemption measure, with the benefit confined to the exporter who used the specified taxable service for export of goods. On the stated facts, a manufacturer that had assumed the service tax liability under an arrangement was not covered merely because it paid the tax on services received by another party. The manufacturer was therefore not prima facie entitled to the refund, and the appellate order allowing refund was stayed pending final disposal of the appeals.

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Issues: Whether the manufacturer could claim refund of service tax paid on port services received by another party for export of the goods, and whether the operation of the appellate order allowing such refund should be stayed pending final disposal of the appeals.

Analysis: The refund notification was examined on a prima facie basis and was construed strictly as an exemption notification. The benefit under the notification was found to be intended for the exporter who used the specified taxable service for export of goods. On the facts, the manufacturer had entered into an arrangement by which it assumed the service tax liability, but the notification did not extend the refund benefit to a manufacturer standing in the place of an exporter or to a third party who paid the tax on services received by another.

Conclusion: The manufacturer was not prima facie entitled to claim refund under the notification, and the order of the Commissioner (Appeals) was stayed till final disposal of the appeals.

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