Revenue-neutral transfer of used capital goods defeated duty demand, with no suppression or intent to evade established.

Duty demand on transfer of used capital goods was treated as revenue-neutral, because any credit reversed by one unit would have been available to the other unit. The legal position on duty computation for used capital goods was also unsettled during the relevant period, with contrary views on the applicable method. On that basis, the record did not establish suppression of facts or misdeclaration with intent to evade duty, so the connected interest and penalty could not be sustained. Relief was granted to the appellants.

---

---

Issues: Whether duty demand on transfer of used capital goods and the connected interest and penalty were sustainable in the absence of suppression or intent to evade duty.

Analysis: The transfer of capital goods was held to be revenue-neutral because any credit reversed by one unit would have been available to the other unit. The existing legal position during the relevant period was also found to be unsettled, with contrary views on the manner of duty computation for used capital goods. In these circumstances, the evidence did not support suppression of facts or misdeclaration with intent to evade duty, and the basis for sustaining the demand could not stand.

Conclusion: The demand was not sustainable and the appellants were entitled to relief.

---