Preheat oven to 350 degrees and line pans with cupcake liners.
In a large bowl, sift cake mix to remove any lumps and continue to add the rest of the cake ingredients. Stir until smooth.
Fill cupcake liners 3/4 full and bake for 15-20 minutes or until an inserted knife comes out clean.
Caramel Frosting: Beat butter until smooth. Add 2 1/2 cups powdered sugar and beat again. Slowly add in caramel. Add more powdered sugar to make thicker if needed.
Coconut Caramel Topping: Carefully toast coconut in a pan on the stove or in the oven on broil. But be careful because the coconut can easily burn! Pour into a bowl and crush up with your hands or a spoon. Just crush it enough hot there aren't long pieces left. Pour in 1/2 cup of the caramel sauce and stir. Depending on how thick you want the topping, continue to add more caramel.
To decorate, pipe a circle of frosting on the top of each cupcake. Use a knife to create a "well" in the frosting and fill it with the coconut topping. Then drizzle with melted chocolate or ganache (chocolate melted with cream).