Sales promotion as input service supported Cenvat credit and justified waiver of pre-deposit with stay of recovery pending appeal.

Sales promotion service was treated as an input service under Rule 2(1) of the Cenvat Credit Rules, 2004, supporting eligibility for Cenvat credit on service tax paid for such services. Relying on the prevailing judicial interpretation, the Tribunal found that this position created a strong prima facie case for the appellant. On that basis, the appellant was granted waiver of pre-deposit of duty and penalty, and recovery proceedings were stayed pending disposal of the appeal.

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Issues: Whether sales promotion service qualified as an input service for availing Cenvat credit, and whether the appellant was entitled to waiver of pre-deposit and stay of recovery pending appeal.

Analysis: Sales promotion was expressly covered within the definition of input service under Rule 2(1) of the Cenvat Credit Rules, 2004. In view of the prevailing judicial interpretation relied upon by the Tribunal, the credit taken on service tax paid for sales promotion disclosed a strong prima facie case in favour of the appellant.

Conclusion: The appellant was entitled to waiver of pre-deposit of duty and penalty, and recovery was stayed during the pendency of the appeal.

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