The Allies certainly had stocks of liquid mustard agent. See the tragic Bari incident. The stated policy was that the agent (or any other chemical weapon) would not be used unless the Axis powers used it first. I have never heard of mustard actually being used by either side.
It is of course quite possible that members of the armed forces were exposed to mustard agent accidently.
My father was serving on the destroyer H.M.S. Brecon and they were deployed to Bari the day after the air raid and subsequent explosion of the ship carrying the mustard bombs in order to enforce the marshal law that had been imposed. He said very little about it, but it was obviously terrible. The fact that the ship was carrying mustard was secret and only known to the master and the senior navy officer, both of whom were killed in the explosion. Therefore, the medical staff had no idea of how to treat those who had been exposed to the mustard.
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