Line 18 indents of two cupcake pans with paper or foil liners. Set aside.

Caramel: Place 1/2 cup water near the stove. Heat sugar and 1/4 cup water in a small (not nonstick) saucepan over medium-high heat until sugar starts to dissolve, 5 to 6 minutes. Swirl pan constantly as mixture continues to cook. When mixture begins to turn amber-colored, 10 to 12 minutes, remove from heat.

Very carefully add 1/2 cup water in 3 additions to saucepan. Stir with a metal spoon until caramel is dissolved, about a minute, returning to heat if needed. Pour into 2-cup glass measuring cup. Add water, if needed, to equal 1-1/3 cups. Let stand until cooled to room temperature. Use half for batter and half for frosting.

Heat oven to 350 degrees. Batter: Blend flour, baking powder, baking soda, cinnamon and salt in small bowl. Beat butter and sugar in large bowl for 1 minute, until light and fluffy. Beat in eggs and sour cream until blended. Alternately fold in flour mixture and 2/3 cup of the cooled caramel mixture in 3 additions, beginning and ending with flour. Spoon into muffin cups, a heaping 1/4 cup each.

Bake at 350 degrees for 21 to 23 minutes or until cupcakes spring back when lightly pressed. Cool in pans on rack 5 minutes. Remove cupcakes directly to rack and cool completely.

Frosting: In a medium-size saucepan (not nonstick), combine the chocolate and the butter. Heat over medium heat until melted and smooth, about a minute. Remove from heat and beat in caramel with mixer until smooth. Beat in half of the confectioners' sugar (mixture will be coarse), then the milk. Beat in the remaining confectioners' sugar until smooth. Let stand at room temperature until good spreading consistency, about 15 to 30 minutes. If desired, transfer frosting to a pastry bag fitted with a star tip and swirl on top of cupcake.