Input service credit for sales promotion and advertisement services was supported by a prima facie nexus with manufactured goods.

Commission agents' services and advertisement services were considered within the inclusive scope of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 where a prima facie nexus with sales promotion of manufactured goods was shown. The commission-based sales promotion activity supported credit eligibility, and the revenue did not show that the advertisement expenditure related equally to manufactured and traded goods. On that basis, the amount already deposited was treated as sufficient, further pre-deposit was dispensed with, and recovery was stayed pending appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of the disputed Cenvat credit on commission agents' services and advertisement services.

Analysis: The dispute concerned credit on services falling within the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004. The commission agents' services were prima facie found to relate to promotion of sales of goods manufactured by the appellant, and the inclusive definition of input service specifically covers advertisement and sales promotion. In respect of the balance credit, the amount already deposited was treated as sufficient, and the advertisement credit was not shown by the revenue to have been incurred for both manufactured and traded goods. On this basis, the appellant was found to have established a prima facie case.

Conclusion: Waiver of pre-deposit was granted for the balance amount of duty, interest and penalty, and recovery was stayed till disposal of the appeal, after treating the amount already deposited as sufficient deposit.

Final Conclusion: The interim relief application succeeded to the extent of dispensing with further pre-deposit and protecting the appellant from recovery during the pendency of the appeal.

Ratio Decidendi: Services used for promotion of sales, including commission-based sales promotion and advertisement, can fall within the inclusive scope of input service for Cenvat credit when a prima facie nexus with the assessee's manufactured goods is established.

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