Special exemption rate claim must be considered before coercive recovery, with interim protection until the decision is made.

The exemption scheme allowed a manufacturer to opt for fixation of a special rate based on actual value addition instead of the standard refund rate, if the prescribed conditions were met. Because the petitioner had applied for that special rate after restoration of the notifications and the request had not yet been examined, the matter had to be considered first on its merits rather than proceeding on the standard rate basis. Pending that decision, no coercive steps were to be taken against the petitioner. The separate question of interest was left open and was not decided in the proceeding.

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Issues: Whether the petitioner was entitled to a direction for consideration of its application seeking fixation of a special rate under the exemption notifications, and whether coercive steps could be taken before such decision.

Analysis: The exemption scheme permitted a manufacturer to opt out of the standard refund rate and seek fixation of a special rate based on actual value addition where the prescribed condition was satisfied. Since the petitioner had made such an application after the restoration of the notifications and that claim had not yet been examined, proceeding straightaway on the basis of the standard rate would be inappropriate. The Court also kept open the separate question relating to interest, as that issue was not decided in the present proceeding.

Conclusion: The application was to be considered by the Principal Commissioner of GST within the time granted, and no coercive measure was to be taken against the petitioner until that decision was made.

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