What is CENVAT Credit?

CENVAT Credit
The output service provider is entitled to avail credit of (i) duty paid on inputs and
capital goods and (ii) service tax paid on input services used by him for providing only
taxable output service. This credit can be used for payment of service tax on his
taxable output service.
Service Tax paid on the ‘input’ services and eligible capital goods used for providing
the output services can be taken as credit. Education Cess paid on the Service Tax
can also be taken as credit. However, the credit of such Education Cess availed can
be utilized only for payment of Education Cess relating to output service. The interest
and penalty amounts cannot be taken as credit.