Successor-manufacturer exemption for unexpired eligibility period upheld where closed unit was transferred in entirety.

A successor-manufacturer that acquires a closed industrial unit in entirety, including land, building, plant and machinery, may claim exemption for the unexpired portion of the earlier eligibility period if it applies within the prescribed time. Section 4A(2B) is read to cover both transferor-based exemption already granted and successor entitlement, and where the former unit had valid eligibility, the competent officer must compute the balance period and issue the certificate without sending the matter for fresh committee reconsideration. Cancellation under section 4A(3) is confined to specified grounds such as misuse, legal error, factual error, breach of conditions, or want of entitlement, after hearing the dealer.

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Issues: Whether a successor-manufacturer who purchased a closed industrial unit was entitled to exemption for the unexpired period of the earlier eligibility certificate, and whether the eligibility certificate issued by the competent officer could be cancelled on the ground that the matter ought to have been sent for de novo consideration by the committee.

Analysis: The unit was transferred in entirety, with land, building, plant and machinery passing to the revisionist, and the earlier manufacturer had already been granted exemption for a fixed period. On a construction of section 4A(2B), a successor-manufacturer who acquires the unit after discontinuation of business and applies within the prescribed time is entitled to exemption for the unexpired portion of the period available to the former manufacturer. The provision contemplates two situations: one where exemption had already been granted to the transferor, and another where exemption could be granted to the successor. Where the former manufacturer had already been granted eligibility, the competent officer is required to compute the unexpired period and issue the certificate; reference to the committee for fresh adjudication is not necessary. Rule 25(3)(f) identifies the officer competent to issue the certificate, while section 4A(3) permits cancellation only where the certificate suffers from misuse, legal error, factual error, breach of conditions, or want of entitlement, after hearing the dealer.

Conclusion: The eligibility certificate issued in favour of the successor-manufacturer was valid, the cancellation order and the appellate order were unsustainable, and the revisionist was entitled to the exemption for the unexpired period.

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