JUDGMENT Honble Bharati Sapru, J.—This revision has been filed by the assessee under Section 11 (1) of the U.P. Trade Tax Act for the assessment year 1995-96 against the order of the Tribunal dated 15.5.2000, by which the Tribunal has imposed penalty upon the assessee for violation of the provisions of Section 4-B(5) of the U.P. Trade Tax Act. The questions of law referred to is as hereunder : "(1) Whether the Trade Tax Tribunal was not justified by completely overlooking the principles of law that the purpose of imposition of penalty on the manufacturer of the notified goods on the stock transfer of the manufactured goods, produced out of the raw material purchased against form 3-B is only to ensure that the tax has been paid either under U.P. Trade Tax Act or under Central Sales Tax Act or else if it is exported. However, since the total exemption has been granted to the applicant under Section 4-A of U.P. Trade Tax Act, hence neither any tax was payable by the applicant within U.P. nor under Central Sales Tax Act, hence the question of payment of any penalty does not arise even if such stock transfers are made in the contravention of Section 4-B(2) of the Act by making the stock transfer? (2) Whether Section 4-B(5), as it stood from 14.5.1994, is absolutely analogous to Section 4-B(6) of the Act even prior to that or subsequently which provides for levy of penalty on the transfer of manufactured goods (notified goods) otherwise than by way of sale within the State of U.P., in the course of inter-State trade or commerce, or in the course of Export and the Trade Tax Tribunal has committed an error of law in completely overlooking this aspect of the matter while confirming the imposition of penalty? (3) Whether the applicant has been admittedly granted exemption from payment of tax under Section 4-A of U.P. Trade Tax Act once an Eligibility Certificate was granted on account of which the applicant was exempted from payment of tax, sale of such notified goods in view of the Eligibility Certificate; hence he was not liable to pay any amount of tax and consequently no penalty could be legally imposed for not selling those manufactured goods/notified goods within the State of U.P. or in the course of inter-State trade or commerce? (4) Whether whatever may be the. (4) Whether whatever may be the. closing stock of the packing material purchased against form 3-B in 1995-96 was the opening stock of such packing material purchased against form 3-B in 1996-97 and all such details being already available on record, the Trade Tax Tribunal was not justified in completely overlooking the same while deciding the appeal? (5) Whether the Trade Tax Tribunal was not justified in treating the packing material against form 3-B as having been utilised in packing of the notified goods which were transferred by way of stock transfer by completely overlooking the Paper Book and the written arguments filed before the Trade Tax Tribunal? (6) Whether under certain contingencies on the sale of the goods, no tax is payable by a dealer on the sale of notified goods, then no penalty could be imposed legally on the dealer for the violation of Section 4-B(2) merely because instead of selling the said goods within U.P. or in the course of inter-State trade or commerce by availing the exemption (no tax is paid) he has made the stock transfers on which also no tax is being paid? (7) Whether even assuming without admitting that any penalty could have been legally imposed for the alleged violation of Section 4-B(2) of the U.P. Trade Tax Act, the penalty could not be levied in excess of the amount of tax which could have been levied on such goods? (8) Whether in any view of the matter, the order passed by the Trade Tax Tribunal is illegal and liable to be set aside? 2. The facts of the case are that the assessee is engaged in the manufacture of Deshi Ghee and milk powder. Its unit is situated at Hasanpur Road, Gajraula, Moradabad. The unit, being a new unit, was granted eligibility certificate on 1.1.1996, granting exemption from payment of tax for a period of 9 years or to the extent of 125% of the fixed capital investment 3. The assessment proceedings for the assessment year 1995-96 were completed and the account books were also accepted and an assessment order was made for the said year. The assessment proceedings for the assessment year 1995-96 were completed and the account books were also accepted and an assessment order was made for the said year. However, proceedings were initiated against the assessee under Section 4-B(5) of the U.P. Trade Tax Act of imposition of penalty on the ground that the applicant had purchased packing material both against Form-3-B within the State of U.P. on concessional rates of tax and had availed the benefit of its eligibility certificate and had also purchased packing material outside the State of U.P. against Form C. Part of the packing material was used for stock transfers and the assessing authority, by its order dated 18.1.99 imposed Rs. 10,41,800/- as penalty under Section 4-B(5) of the U.P. Trade Tax Act. 4. Aggrieved by the order passed by the assessing authority, the assessee filed an appeal under Section 9 of the Act and the Deputy Commissioner (Appeals) by its order dated 12.3.1998 has partly allowed the appeal for the assessment year 1995-96 and has quashed the penalty imposed upon the assessee by order dated 12.3.1998. 5. The Department being aggrieved by the said order, filed a second appeal under Section 10 of the U.P. Trade Tax Act. 6. While hearing and disposing the appeal, the First Appellate Authority has recorded a finding of fact that no tax was levied by the assessee for this period because the stock, which was transferred outside the State of U.P. was 39% of the total production of the assessee and the packing material, which had been purchased against Form-C was far greater in value than the stock transfer made. 7. The second appellate authority has also not disputed the facts and figures with regard to the production figures, transfer of stocks and packing materials purchased against Form-C from outside the State of U.P. and the packing material purchased against Form 3B in the State of U.P. Both the First Appellate Authority and the Second Appellate Authority while examining figures have clearly mentioned that 39% of the stock was transferred outside U.P. and the packing material, purchased was for a sum of Rs.1,35,52,523 i.e., packing material constituted 57% of the total packing material purchased. Thus, the packing material purchased from outside the State of U.P. had remained unused to the extent of 18% of the packing material purchased. 8. Thus, the packing material purchased from outside the State of U.P. had remained unused to the extent of 18% of the packing material purchased. 8. Learned counsel for the assessee has argued that the law with regard to this has been well settled by the Allahabad High Court and has relied on three decisions. Firstly, he has relied on his report in 1980 U.P.T.C. 274 in the case of M/s. Chittar Mal Ram Dayal v. Commissioner of Sales Tax in which this Court has held that the Act or rules do not restrict an assessee holding a recognition certificate from carrying on business otherwise. The anxiety should be to see that raw material obtained was not abused or utilised for purpose other than that for which it was obtained. It is true that assessee did not maintain separate account of extraction of oil from two sources but that does not make any difference as it having been established that oil extracted was more the burden on assessee stood discharged to establish as to what was the oil actually sold in the State. 9. Secondly, learned counsel has relied on a decision reported in 1988 U.P.T.C. 85, Commissioner of Sales Tax, U.P. v. Jetha Nand Puran Chand, Banda wherein this Court came to the conclusion that "if the sale outside the State of U.P. can be traced to goods in respect of which no concession has been availed by the dealer, no penalty under Section 4-B(6) can be levied.” 10. Thirdly, learned counsel has relied on another decision of this Court as reported in 2000 U.P.T.C. 105, M/s.Vam Organic Chemicals Ltd., Moradabad v. Commissioner of Sales Tax. In this decision, this Court came to the conclusion that in a case where no tax is payable by the dealer and the amount of penalty is relatable to the amount of tax which would otherwise have been payable by the dealer but for enjoying the benefit of eligibility certificate, no amount of penalty can be imposed. 11. In this decision, this Court came to the conclusion that in a case where no tax is payable by the dealer and the amount of penalty is relatable to the amount of tax which would otherwise have been payable by the dealer but for enjoying the benefit of eligibility certificate, no amount of penalty can be imposed. 11. In reply to all these contentions, learned Standing Counsel has argued that the Tribunal has taken a view that although all the facts and figures were not disputed before the Tribunal, the Tribunal varied with the view given by the First Appellate Authority on account of the fact that the assessee could not show or establish as to what was the packing material used against Form-3-B and what was the packing material used against Form C. 12. Having heard learned counsel on both the sides and having examined the materials and evidences on record, I am of the view that the contentions as raised by the learned counsel for the revisionist have substance on account of the fact the assessee actually was able to establish before the First Appellate Authority that the stock transfers were only 39% of the production and this figure was not disputed. 13. The other fact, which is firmly established, is that the total packing material imported from outside the State of U.P. was to the extent of 57%. 14. Since balance remained of the packing material obtained from outside U.P., the conclusion reached by the First Appellate Authority was correct, i.e., to say that no evasion of packets had been made by the assessee and in fact, he could have made further stock transfers outside the State of U.P. to the extent of the balance of 57%. 15. If the assessee had exceeded the use of packing material for making stock transfer beyond 57%, then alone, tax may have been imposed and also penalty to the same extent should have been imposed on the assessee. 16. The question of law referred to are thus answered in favour of the assessee and against the revenue. 17. The imposition of penalty in the present case is not justified. 18. The revision is allowed. ————