The effect of CeO$_2$ coating on the surface nucleation of the top-seeded melt-growth processed YBCO superconductors was studied. It was effective that the coating of Y123 compact surfaces by CeO$_2$ powder suppressed the undesirable subsidiary YBa$_2$Cu$_3$O$_{7-y}$ (Y123) nucleation during melt processing. BaCeO$_3$ was formed in the CeO$_2$-coated layers, which might cause a CuO-excessive liquid at the partial melt stage of $Y_2$BaCuO$_{5}$(Y211) plus liquid, and thus the Y123 nucleation at the YBCO compact surfaces could be suppressed during the melt growth of Y123 grain. In addition, the CeO$_2$ refined the Y211 particles near the compact / coating interface. While the levitation forces of the top surfaces with and without CeO$_2$ coating were similar to each other, the levitation force of the interior of the CeO$_2$ coated sample was higher than that of the interior of the sample without CeO$_2$ coating, which was attributed to the suppression of subsidiary Y123 nucleation at the compact walls.s.s.