Well, I really don't understand this part:
"This by default creates 3 parameters when i call this SP via CR. then to make cascading. I change LOV to dynamic. Double clicked one of these parameters. Then under values i select CIRCLE from drop down list, then VENDORS ,then Run_Date."
If you read the solution properly, it involves adding a Stored Proc, adding a Command Object SQL, creating Prompts in the Main report, Linking the prompts with the Stored Proc prompts in the Subreport. If you've followed these steps to the point, you should see a Dynamic Cascading prompt.
It works for me and the others who've tried, so I'm wondering why this shouldn't work for you.
-Abhilash