The Central Board of Indirect Taxes & Customs (CBIC) has indicated that interest waiver on payment of import duty through the Electronic Cash Ledger (ECL) may not be extended beyond April 10. The final decision on the extension will be taken on Monday.
Electronic Cash Ledger (ECL) has been enabled for importers and exporters effective April 01, 2023. According to the Section 51A of the Customs Act, 1962, every assessee has to maintain an ECL on the customs’ portal and pay levies. Delay in paying duties result in interest rate at 15 per cent.
On April 06, the CBIC acknowledged that the traders have, in a large number of cases, faced difficulties while paying the duties due to technical issues, resulting in a interest payment.
The board has said that technical difficulties have been resolved by the Directorate General of Systems. However, as an interim measure, it was decided to waive the interest payable for the period from April 01 to April 10 (both dates inclusive) in respect of such goods where the payment of import duty is to be made from the amount available on ECL.
When businessline asked about further course of action, a senior Finance Ministry official said, “The system is quite stable now. Extension may not be needed. We will review it tomorrow.”
What is ECL?
ECL reflects non-interest bearing deposits with the government for payment of taxes.
In a circular dated March 30, 2023, the CBIC said the phased introduction of ECL is aimed at leveraging technology and reforming the payment process, inter-alia related to clearance of goods as the deposit may be held in ECL by the trade for making subsequent transaction-wise payment of various types.
Deposits under ECL provision requires 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 and the importers who are assigned Unique Identification Number (UIN) under GST are allowed to create an ECL account.
Benefits of ECL
Once registered, deposits can be made using internet banking facility of 12 banks, including the SBI and PNB. Other banks are expected to join soon.
The balance of deposits after utilising for payments may be used for subsequent transactions. However, if the refund is applied for, the amount applied for will no longer be available for use. After the refund decision, the amount would be credited to the bank account of the person registered on customs automated system.
Listing additional benefits of the mechanism, CBIC has said that making deposits before goods arrival result in certainty and quick clearance. This will also reduce instances of payment rejections and double duty payments as rejected amount will stay at the ECL for re-initiating remittances.
Importer who wishes to continue payment on transaction basis is provided an option to remit on the portal. Internally, the system design takes care of routing the payments instantaneously through the ECL before accounting for duty payments.