Special rate fixation under excise notification must be decided before coercive recovery is pursued.

A claim for fixation of a special rate under Clause 3(1) of Notification No. 20/2008-Central Excise had to be examined before any recovery was pursued on the basis of the standard notification rate. The petitioners relied on the notification mechanism for special rate fixation on the ground that add-ons to the manufactured goods justified assessment by actual value addition. Because the notification provided a route for such determination, the department could not proceed with coercive recovery until the pending application was decided. Recovery action was therefore restrained pending consideration of the special rate request.

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Issues: Whether the petitioners' application seeking fixation of a special rate under Clause 3(1) of Notification No.20/2008-Central Excise dated 27.03.2008 was required to be considered before recovery steps were taken on the basis of the notification rate.

Analysis: The petitioners had invoked Clause 3(1) of the notification on the footing that add-ons made to the manufactured goods justified fixation of a special rate based on actual value addition. Since the notification itself provides a mechanism for such a claim, the department could not proceed on the basis of the standard refund rate without first deciding the pending application. Pending that decision, coercive recovery in terms of the communication issued by the department was not .

Conclusion: The application for fixation of a special rate had to be considered first, and coercive recovery was restrained until such decision was taken.

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