Special rate fixation under a refund notification must be decided before coercive recovery proceeds on the general rate.

A fiscal notification that allows a manufacturer to seek fixation of a special rate based on actual value addition requires the competent authority to decide that application first. Where the assessee has already invoked that option on the basis of claimed add-ons, the department should not proceed solely on the general refund rate or take coercive recovery steps until the special-rate request is determined. On that footing, bank account attachment and similar recovery measures were restrained pending a decision on the application.

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Issues: Whether the assessee's applications for fixation of a special rate under the notification had to be considered before the department proceeded on the basis of the general refund rate and initiated coercive recovery measures.

Analysis: The notification granted the manufacturer an option to seek fixation of a special rate where the actual value addition exceeded the prescribed rate. Since the petitioner had already applied for such special rate on the basis of asserted add-ons to the manufactured goods, the claim required an authoritative decision before the department could proceed to enforce the reduced refund rate. In the absence of such determination, coercive steps, including bank account attachment and pursuit of the impugned communication, were not considered appropriate.

Conclusion: The applications for special rate had to be considered by the Principal Commissioner before further recovery action, and coercive measures were restrained until such decision was taken.

Ratio Decidendi: Where a fiscal notification confers a statutory option to seek a special rate based on actual value addition, the competent authority must first decide that application before the department can take coercive action on the basis of the general rate.

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