Simplify Custom Duty Payment Process with Electronic Cash Ledger (ECL)

The Customs Act, 1962, envisages the functionality of the Electronic Cash Ledger (ECL) in Section 51A. The ECL is a non-interest bearing deposit that the importer, exporter, or any person liable to pay duty, fees, etc., under the Customs Act, has to make with the government for the purpose of payment. The Customs (Electronic Cash Ledger) Regulations, 2022 (ECLR) govern the manner of operationalization of ECL and related aspects. This article provides an overview of ECL, its phased introduction, and its functionalities.

CBIC Customs Circular 9/2023 dated 30/03/2023: Phased Implementation of Electronic Cash Ledger (ECL) in Customs w.e.f April 1, 2023

Phase-wise introduction of ECL

Pending the development of IT infrastructure and necessary integration with authorized banks, RBI and Pr.CCA (CBIC), all deposit classes were exempted till March 31, 2023. Considering the present state of development and integration, the Board has decided to enable ECL in phases from April 01, 2023.

In the first phase, from April 01, 2023 till April 30, 2023, the exemption to deposit from the provisions of section 51A shall be restricted to deposits with respect to goods imported or exported in Customs stations where the Customs Automated System is not in place, deposits with respect to accompanied baggage, and deposits with respect to goods imported or exported at International Courier Terminals, except those used for making electronic payment. The exemption applies to any duty of customs, including cesses and surcharges levied as duties of customs, integrated tax, Goods and Service Tax Compensation Cess, interest, penalty, fees, or any other amount payable under the Act or Customs Tariff Act, 1975.

In the second phase, from May 01, 2023, the exemptions cited above would continue, except for the deposits with respect to goods imported or exported at International Courier Terminals. Payments relating to courier shipments would be required to be made through ECL from May 01, 2023 onwards.

Benefits of ECL

The phased introduction of ECL aims to leverage technology and reform the payment process related to clearance of goods. The deposit may be held in ECL by the trade for making subsequent transaction-wise payments of various types. This has the potential to ease compliance in numerous ways, such as:

i) Making deposits before goods arrival allows certainty in quick discharge duty 24 x 7 for clearance;

ii) Reducing instances of payment rejections;

iii) Reducing instances of double duty payment as rejected payment will stay at the ECL for re-initiating payment of duties;

iv) Providing an option to pay on the portal for the same, to importers who wish to continue payment on a transaction basis;

v) Enabling NEFT and RTGS modes of payment, in addition to internet banking; and

vi) Enabling one-time importers to also make payment.

Registration for ECL

Deposits under the ECL provision require the person to be registered at ICEGATE portal and to create an ECL Account. In addition to importers/exporters (IECs), the customs brokers, couriers who are making payments on behalf of the importers/exporters are also enabled in ECL. Similarly, the importers who are assigned a Unique Identification Number (UIN) under GST are also enabled in ECL. The detailed advisory for registration and the creation of the ECL Account will be available on the said portal.

Deposit to ECL

The manner of maintaining ECL and modes of deposits into the ECL have been outlined under Regulation 3 of ECLR. A deposit challan may be generated at said portal for a sum chosen by the person, and deposit made in ECL using the authorized payment modes. The amount deposited shall be visible on the ECL maintained on the said portal. The authorized payment modes include internet banking, NEFT, and RTGS. 12 banks are already enabled for deposit into ECL through internet banking, and other banks are expected to complete testing and be onboarded soon. NEFT/RTGS mode of deposit into ECL is permissible for all banks, and users of those banks, which are not yet onboarded for internet banking, may also utilize this. However, the NEFT/RTGS facility shall be operational from April 03, 2023.

Payment of liabilities using ECL

The manner of utilizing ECL to make payments is outlined in Regulation 4 of ECLR. The payment using the deposit available in ECL may be made by selecting the payment challan generated at ICES/ECCS or other application, with ECL as a mode of payment. A functionality to make payment without first depositing into ECL is also provided, allowing users to select the payment challan and choose among internet banking/NEFT/RTGS options and complete the payment process. In such a situation, at the back-end, a deposit challan for the same amount will be generated on the portal, deposited in ECL and debited from ECL as payment. In case there is a rejection of payment challan at the application end, the payment can be re-initiated from the ECL by logging into the portal.

Refund of balance in ECL

The balance of deposits after utilizing for payments may be utilized for subsequent payments. However, if the refund is applied for, the amount applied for will no longer be available for use and refund decided and thereafter credited to the bank account of the person registered on customs automated system. The process is described in Regulation 5 of ECLR. The systems advisory for ECL balance refund is being made available on ICEGATE. The balance in ECL being a deposit, its refund is not governed by section 27 of Customs Act.

Sensitization

The introduction of ECL is a significant reform in the payment process related to clearance of goods. As segments of e-payment shall get migrated in phases to ECL, the existing ICEGATE payment system hitherto in use would not run in parallel. The deposits into ECL, being non-interest-bearing, are suited for purposes of planned impending or immediate payment needs, thereby also minimizing the need for applying for refunds. Stakeholders such as importers/exporters, customs brokers, couriers, etc., should be sensitized about ECL, its functionalities, and the relevant notifications and advisories issued by the DG Systems. Suitable public notice/trade notice/standing order should be issued for the same.

Conclusion

The phased introduction of ECL is a significant reform aimed at leveraging technology and easing compliance related to payment of customs duties and fees. It is expected to bring transparency, certainty, and efficiency in the payment process and reduce instances of payment rejections and double payment of duties. All stakeholders are advised to register for ECL and utilize its functionalities for a hassle-free payment process.