 CENVAT :

CENVAT or Central Value Added Tax is a modification of the

previously functioning MODVAT (Modified Value Added Tax), and
is a part of the central excise framework of the country.
Introduced in the year 2004, CENVAT aims to reduce the tax
burden faced by a consumer when he/she purchases a product,
offering a clear picture of tax liability at various stages of
production. The CENVAT notification of 2004 offered clarity with
regards to credit to both manufacturers and service providers,
ensuring that all parties are aware about their duties. The
government set up “The CENVAT Credit Rules” in 2004, which
helps in implementing CENVAT in the country and provides the
manufacturer of the final product certain tax credits on the excise
duty payable by him/her.
A manufacturer or service provider is expected to pay certain
basic duties in the execution of his/her work, with a number of
steps involved in each stage of manufacture. CENVAT ensures
that there is a smooth flow of duties, with no additional drain on
any one segment, be it a manufacturer or a customer, eliminating
double taxation and keeping the entire chain simple and clean.
 CENVAT is a part of India's central excise framework. It
reduces the consumer's tax burden when purchasing any
product and offers a transparent picture of tax liabilities at
every stage of production.
 CENVAT thereby reduces cascading taxation, ensuring that
no party is unduly taxed an additional amount.
The CENVAT scheme provides credit for service providers and
manufacturers. Thus, as per the scheme, an input which is
eligible for credit has been defined by the CENVAT Credit Rules
as:
1. All goods used in the factory by the manufacturer of the final
product; or
2. Any goods including accessories, cleared along with the final
product, the value of which is included in the value of the
final product and goods used for providing free warranty for
final products; or
3. All goods used for generation of electricity or steam for
captive use; or

4.All goods used for providing any output service.