Sales promotion input service credit covers taxed dealer commissions, making denial of CENVAT credit and related demand unsustainable.

CENVAT credit on dealer commissions is described as admissible where dealers are engaged for sales promotion and invoices show service tax on that activity. The note states that the inclusive scope of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 expressly covers sales promotion, so dealer services used to promote manufactured goods qualify for credit. It further records that, on identical facts, earlier tribunal reasoning allowing credit was followed. On that basis, denial of credit and the related demand under Rule 14 read with Section 11A are presented as unsustainable.

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Issues: Whether service tax paid on dealer commissions for sales promotion activities could be treated as CENVAT credit eligible input service under Rule 2(l) of the CENVAT Credit Rules, 2004, and whether the demand confirmed under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 was sustainable.

Analysis: The dealers were engaged under the agreements specifically to promote sale of the goods manufactured by the appellant, and the invoices reflected service tax on such sales promotion activity. The inclusive part of Rule 2(l) expressly covers sales promotion as an input service. The Tribunal also noted that the facts were identical to the earlier decision relied upon, where credit on sales promotion services had been allowed.

Conclusion: The service tax paid on the dealer services qualified as input service, and denial of CENVAT credit was unsustainable. The demand confirmed below was set aside, and the appeal succeeded in favour of the assessee.

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