Cenvat credit scheme allows offset of input excise and service tax credits against output tax liability to prevent cascading duty. Cenvat credit permits manufacturers and service providers to take credit of excise duty on inputs and capital goods and service tax on input services and to utilise those credits against output tax liabilities, under the procedural and eligibility conditions prescribed by the Cenvat Credit Rules, 2004, thereby restricting taxation to value addition and preventing duty-on-duty.