I see what you mean about C7 - there is often an unclear distinction there, except of course it sounds completely different. The major 7th is used a lot in jazz, but still mostly in chords. The Indian will linger for a long time on the 7th in their melodies, which always sounds slightly off to western ears. Also they will often sing the tonic note, then drop a semi tone to the 7th in sliding motion, which sounds like they are going to sleep.