Prafulla C. Pant JUDGMENT
Dipak Misra, J.
1. Leave granted in S.L.P. (Civil) No. 11487 of 2006.
2. Keeping in view the need to fortify the traditional connection and strengthen the economic cooperation for the purpose of development and mutual benefit, the Government of India had signed the Treaty of Trade with His Majesty's Government of Nepal in July, 1996. Articles III, IV and V of the said Treaty read as follows:
Article III
Both the contracting parties shall accord unconditionally to each other treatment no less favourable than that accorded to any third country with respect to (a) customs duties and charges of any kind imposed on or in connection with importation and exportation and (b) import Regulations including quantitative restrictions.
Article IV
The contracting parties agree, on a reciprocal basis, to exempt from basic customs duty as well as from quantitative restrictions the import of such primary products as may be mutually agreed upon, from each other.
Article V
Notwithstanding the provisions of Article III and subject to such exceptions as may be made after consultation with His Majesty's Government of Nepal, the government of India agree to promote the industrial development of Nepal through the grant on the basis of non-reciprocity of specially favourable treatment to imports into India of industrial products manufactured in Nepal in respect of customs duty and quantitative restrictions normally applicable to them.
3. The protocol to the Treaty with reference to Article V stipulated many clauses. With reference to Article V clauses which are relevant are reproduced below:
1. The Government of India will provide access to the Indian market free of customs duties and the quantitative restrictions for all articles manufactured in Nepal.
xxxx xxxx xxxx
3. On the basis of a Certificate issued, for each consignment of products manufactured in the small scale units in Nepal, by His Majesty's Government of Nepal, or by an agency designated by His Majesty's government of Nepal that the relevant conditions applicable to the products manufactured in similar small scale industrial units in India for relief in the levy of applicable Excise Duty rates are fulfilled for such a parity, Government of India will extend parity in the levy of Additional duty on such Nepalese products equal to the treatment provided in the levy of effective Excise Duty on similar Indian products under the Indian customs and Central Excise Tariff.
4. The "Additional Duty" rates equal to the effective Indian Excise duty rates applicable to similar Indian Products under the Indian Customs & Central Excise Tariff will continue to be levied on the imports into India of products m........