Cenvat credit on advertisement services: prima facie case found for waiver of pre-deposit and stay of recovery.

Cenvat credit on advertisement and sales promotion services used for 100 gram tin packs of pan masala was treated as prima facie allowable for stay purposes because Rule 15 of the Pan Masala Packing Machines Rules, 2008 applies only to input, capital goods, or input services used in manufacture of notified goods. Advertisement and sales promotion services are ordinarily connected with the business of manufacture rather than direct manufacture, and there was prima facie merit in the contention that promotion of tin packs did not justify proportional denial of credit for retail pouch packs. The pre-deposit of the demand, interest, and penalty was waived and recovery stayed.

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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 a dispute concerning Cenvat credit on advertisement and sales promotion services.

Analysis: The disputed services were advertisement and sales promotion services availed for 100 gram tin packs of pan masala, while the prohibition in Rule 15 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 applies only to input, capital goods, or input services used for manufacture of notified goods. Advertisement and sales promotion services are ordinarily in relation to the business of manufacture and not directly used in manufacture. On the facts, there was also prima facie force in the contention that the advertisement for tin packs did not promote the retail pouch packs in a manner justifying denial of credit proportionately.

Conclusion: The appellant established a prima facie case, and pre-deposit of the Cenvat credit demand, interest, and penalty was waived with stay of recovery.

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