CENVAT stands for Central Value Added Tax. It was a system implemented in India to allow manufacturers and service providers to claim credit for excise duties and service tax paid on inputs and capital goods used in the production of goods or provision of services. This system was based on the principle of Value Added Tax (VAT), where tax is levied only on the value added at each stage of production and distribution, allowing set-off of taxes paid on previous stages. While CENVAT was implemented primarily in relation to Union Excise Duties and Service Tax, its fundamental nature is that of a Value Added Tax system at the central level.