Hi Sumana
The purpose of IT2003 is to record any deviation in the normal routine working hours of the employee. For example in your case, the EE X is usually expected to work in 1st shift and thus his PWS would have been configured accrodingly, but when he comes to office in 2nd shift there should be a mechanism to tell the system to record the employee's time under second shift and make any required payments accrodingly. This is where IT2003 helps.
The screen of IT2003 looks like above. You need to first configure the substitution type for the employee's PSG. Then in the infotype, populate the different sections as per what you want to substitute. Now lets consider your case. Lets say that Mr X works in first shift whose DWS is DY01. We also have another DWS for the 2nd shift called DY02. Now, on the day when X comes in the 2nd shift, you would have to create a record of IT2003 and in the section "Daily Work Schedule" provide the value DY02. Thus when the time eval is executed, the system would consider 2nd shift hours as planned working hours for that day. Incase, you do not have any particular DWS for the 2nd shift, then you can mention the hours worked by the employee in section "Individual Working Time" and provide an appropriate DWS Class to it for the payments to be made as per the shift.
The answer to your point d (for making extra payments) is to configure wage type generation rule in table T510S. You can generate a time wage type for any additional hours that you wish to pay to the employee.
Incase you want to give comp off to the employee instead of addtional payement, then you can write a PCR that would read the IT2003 hours and add them to the Compensatory Off absence quota. The employee can then use this quota to take a comp off.
Hope this helps.