It is recommended to start the battle with a preemptive attack to stagger the Tyrant so it cannot forge a Centaurion Blade. A good setup is COM/COM/RAV with Lightning, Fang and Hope or use RAV/COM/SYN to buff the party with defensive and offensive spells if the party cannot defeat it in one stagger.
If the Tyrant creates the Centaurion Blade, it is possible to defeat it, but the Tyrant will only create another one. The blade is fast and powerful, and might make it very difficult to win the battle if the party doesn't defeat it first. Tyrant won't create the blade when it is staggered, which is what the party should aim for. When the Tyrant dies, so will the blade.