Special-rate application under central excise notification must be decided first before coercive recovery proceeds.

Clause 3(1) of Notification No. 20/2008-Central Excise permits a manufacturer to seek fixation of a special rate based on actual value addition where the table rate is lower than the applicable entitlement. Where such an application is pending, the department should first decide that request before proceeding on the basis of the table rates or taking coercive recovery action. The operative effect is that prior consideration of the special-rate application is required, and interim protection against coercive steps follows until that decision is made.

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Issues: Whether the application for fixation of a special rate under Clause 3(1) of Notification No. 20/2008-Central Excise dated 27.03.2008 had to be considered before the department could proceed on the basis of the notification and take coercive action.

Analysis: Clause 3(1) of the notification conferred an option on the manufacturer to seek fixation of a special rate representing actual value addition where the prescribed table rate was lower than the applicable entitlement. The notification had been restored, but the petitioner's application seeking a special rate had not yet been decided. In that situation, proceeding straightaway on the basis of the table rates without first deciding the pending application would be inappropriate.

Conclusion: The pending application had to be considered first, and coercive action could not be taken until that decision was made.

Final Conclusion: The writ petition was allowed to the extent of directing prior consideration of the special-rate application and interim protection against coercive recovery.

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