What Duties Can a Duty Credit Scrip Pay? Basic Customs Duty, and Nothing Else

The sentence that sets the limit

Regulation 6(1) of the Electronic Duty Credit Ledger Regulations, 2021 provides that "the duty credit available in the e-scrip in the ledger shall be used for payment of duties of Customs specified in the First Schedule to the Customs Tariff Act, 1975". That is the whole permission, and everything else on this page follows from it.

The notification that created the scheme's duty credit says it too. Condition 2(2) of Notification No. 76/2021-Customs (N.T.) dated 23 September 2021, issued under section 51B of the Customs Act, 1962, requires "that such duty credit shall be used for payment of the duty of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) on goods when imported into India". Two independent instruments, the same limit.

ICEGATE says the same thing in operational language and then names the duty outright. Paragraph 12 of the ICEGATE e-scrip advisory provides that the owner of the scrip can use it in the Bill of Entry "for the payment of the duty of customs leviable under the First Schedule of the Customs Tariff Act, 1975 (51 of 1975) i.e., Basic Customs Duty (BCD)". Paragraph 17 says the same for RoSCTL.

What that leaves outside

The First Schedule to the Customs Tariff Act, 1975 is the tariff schedule: it specifies the rates of basic customs duty against tariff items. The other charges on an import are levied by other provisions, and being levied elsewhere is exactly what puts them outside Regulation 6(1). In practice that means integrated tax and compensation cess on imported goods are not payable out of an e-scrip, and neither is Social Welfare Surcharge, which is levied as a duty of customs by section 110 of the Finance Act, 2018 rather than by the First Schedule.

This is not a technicality. On a consignment where basic customs duty is a modest percentage and integrated tax sits at a much higher rate on a base that includes that duty, the scrip covers the smaller of the two numbers. The saving is a percentage of the basic duty line, not a percentage of the total you remit.

Working out what a scrip is worth on a given import

The arithmetic is short, and it is the arithmetic that decides whether buying scrips is worth the effort on a particular Bill of Entry.

• Start with the basic customs duty on the entry, not the total duty and tax payable.
• A scrip is worth its full face value against that line: a rupee of duty credit discharges a rupee of basic customs duty.
• A scrip is bought below face, so the saving is the basic customs duty line multiplied by the discount to face, less whatever the purchase costs you.
• Integrated tax and compensation cess are unaffected either way. They are paid in cash and, where the importer is entitled, taken as input tax credit under the GST law in the ordinary course.

Two consignments of the same value can therefore be completely different propositions. A tariff line carrying a high basic customs duty is where scrips do real work. A line at nil or near nil basic duty, or one fully covered by a preferential rate under a trade agreement, leaves a scrip with almost nothing to discharge. Our free customs duty calculator separates those lines on a worked entry, and each HS code page shows the part of the bill a scrip can pay.

How the scrip is actually applied on the Bill of Entry

The mechanics are specific enough to be worth stating, because "pay with a scrip" sounds like a payment method and is not one. Paragraph 12 of the ICEGATE e-scrip advisory provides that the scrip is applied "by mentioning the details of the eScrip(s) in the license table of the Bill of Entry". The advisory then names the codes: paragraph 13 provides that for RoDTEP the scheme code in the Bill of Entry is RD with the notification number as RODTEP, and paragraph 18 provides that for RoSCTL it is RS with the notification number as ROSCTL.

So the scrip is declared on the entry the way an authorisation is declared, and the duty is discharged by debit to the ledger rather than by a payment challan. That is also why the scrip has to be in the importer's own ledger before the entry is filed, not arranged afterwards.

Who is allowed to hold one

Regulation 7(1) provides that transfer of duty credit in an e-scrip is allowed within the customs automated system from the ledger of one person to the ledger of another person "who is a holder of an Importer-exporter Code Number issued in terms of the Foreign Trade (Development and Regulation) Act, 1992". An IEC is the entry condition on the buy side, not a formality.

Two more constraints shape what an importer can actually buy. Regulation 7(2) provides that the duty credit is transferred at a time for the entire amount in the e-scrip and that transfer in part is not permitted, so scrips move whole. And Regulation 7(3) provides that the two year validity, running from creation of the e-scrip in the ledger, does not change on account of transfer, so a buyer inherits whatever window is left rather than a fresh one. Regulation 6(2) and 6(3) provide that unutilised credit lapses at the end of that period and that lapsed credit shall not be re-generated.

What we could not establish

• How Social Welfare Surcharge behaves when the basic duty is discharged by a scrip. Circular No. 3/2022-Customs dated 1 February 2022 clarifies a neighbouring question: that where the aggregate of customs duties forming the base is zero because of an exemption, the Social Welfare Surcharge payable is nil, and the law does not require it to be computed on a notional duty at tariff rate. Debiting an e-scrip is a payment of duty under Regulation 6(1) rather than an exemption from it, so that circular does not decide the point, and we found no instrument that addresses the scrip case directly. We are not going to reason our way to an answer on a page an importer might act on. Ask the assessing officer or your customs broker for the treatment at your port.
• Other levies outside the First Schedule. The same logic that excludes integrated tax should exclude any levy imposed by a provision other than the First Schedule. We have since traced the three that matter most to their own charging provisions, and each is levied elsewhere: integrated tax by section 3(7) of the Customs Tariff Act, 1975, Social Welfare Surcharge by section 110 of the Finance Act, 2018, and Agriculture Infrastructure and Development Cess by section 124 of the Finance Act, 2021. Each of those sections levies its charge on goods specified in the First Schedule, which is not the same thing as being levied by that Schedule, and the distinction is the whole point. We still do not publish a list that reads as exhaustive, because we have not traced every levy on the statute book.
• Whether a scrip can be used against duty demanded later rather than at assessment. Regulation 6(1) speaks of payment of duties of customs and the advisory describes use in the Bill of Entry. Nothing we read addresses a post clearance demand. We do not know.

Checked against the instruments named on this page: the primary sources themselves, not anyone’s copy of them.

Where to go from here

If the basic customs duty on your entries is a real number, scrips are worth doing and the practical question is sourcing and settlement rather than eligibility: covering a Bill of Entry with scrips covers that, and how an importer actually buys a scrip today covers what that involves without a platform. If you also export, the same instrument runs the other way: selling a scrip.

Frequently asked questions

Can a duty credit scrip be used to pay IGST on imports?

No. Regulation 6(1) of the Electronic Duty Credit Ledger Regulations, 2021 confines the duty credit to payment of duties of Customs specified in the First Schedule to the Customs Tariff Act, 1975, and the ICEGATE e-scrip advisory describes that as basic customs duty. Integrated tax on imported goods is levied by a different provision and is paid in cash.

Which duties can a RoDTEP scrip pay?

Duties of customs specified in the First Schedule to the Customs Tariff Act, 1975, which paragraph 12 of the ICEGATE e-scrip advisory identifies as basic customs duty. The same limit applies to a RoSCTL scrip under paragraph 17.

Can a scrip pay Social Welfare Surcharge?

Social Welfare Surcharge is levied by section 110 of the Finance Act, 2018 and not by the First Schedule to the Customs Tariff Act, 1975, so it is outside what Regulation 6(1) permits an e-scrip to pay. Whether the surcharge is computed on basic customs duty that has been discharged by debiting a scrip is a separate question that we could not settle from any instrument, and we say so rather than guess.

How is a scrip applied on a Bill of Entry?

By mentioning the e-scrip details in the license table of the Bill of Entry, per paragraph 12 of the ICEGATE e-scrip advisory. The scheme code is RD with notification number RODTEP for a RoDTEP scrip, and RS with ROSCTL for a RoSCTL scrip.

Do I need an IEC to buy a duty credit scrip?

Yes. Regulation 7(1) of the Electronic Duty Credit Ledger Regulations, 2021 allows transfer only to a person who holds an Importer-exporter Code Number issued under the Foreign Trade (Development and Regulation) Act, 1992.

Does buying a scrip give me a fresh two year validity?

No. Regulation 7(3) provides that the two year validity from creation of the e-scrip does not change on account of transfer, so you inherit the remaining window. Regulation 6(2) and 6(3) provide that unutilised credit lapses at the end of it and that lapsed credit is not re-generated.