EXPLANATORY STATEMENT
Customs By-law No. 2020321
Customs Act 1901
Section 271 of the Customs Act 1901 (the Act) provides, in part, that where an item of a Customs Tariff is expressed to apply to goods, or to a class or kind of goods, as prescribed by by-law, the Comptroller‑General of Customs may make by-laws for the purposes of that item.
A Customs Tariff is defined in section 4 of the Act to mean an Act imposing duties of customs. The Customs Tariff Act 1995 (the Customs Tariff Act) is an Act imposing duties of customs, and is therefore a Customs Tariff for the purposes of the Act.
Section 18 of the Customs Tariff Act provides for calculation of concessional duty.
Background
For the purposes of proposed item 57B to Schedule 4 to the Customs Tariff Act, goods, as prescribed by by-law, that are medical products or hygiene products, capable of use in combating the novel coronavirus that causes the disease known as COVID‑19, are dutiable at the rate of “Free”. Item 57B is a temporary measure covering imported goods where the time for working out the rate of duty on the goods is in the period beginning on 1 January 2021 and ending at the end of 30 June 2021.
Instrument
By-law 2020321 covers certain medical products and hygiene products imported as part of the response the COVID-19 pandemic. The by-law will reduce the rate of duty on prescribed medical products or hygiene products required in the response to the COVID‑19 pandemic to ‘Free’. As such, goods listed in this by-law are only those goods that have a duty rate other than ‘Free’ in Schedule 3 of the Customs Tariff Act, or for which there is no other Schedule 4 concession available, including Item 50 Tariff Concession Orders.
Paragraph 3 of the Schedule to the By-law sets out a list of the medical or hygiene products to which by-law 2020321 applies. Subparagraph 3(a) covers a range of Personal Protective Equipment capable of limiting the transmission of organisms to humans. Goods covered in this paragraph include facemasks, gloves, clothes or gowns, goggles, eyeglasses, eye visors or face shields, of any material.
Subparagraph 3(b) of the Schedule to the By-law covers disinfectant preparations of heading 3808 of the Schedule 3 of the Customs Tariff Act, excluding hand sanitisers. The by-law covers disinfectant products able to disinfect surfaces or objects of the novel coronavirus that causes COVID-19, put up in forms or packaging for retail sale.
Subparagraph 3(b) does not cover disinfectant products of heading 3808 in Schedule 3 to the Customs Tariff Act capable of disinfecting human skin of the novel coronavirus that causes COVID-19, commonly referred to as hand sanitisers. There is currently significant manufacturing capacity in Australia for hand sanitiser. The exclusion of hand sanitiser reflects this capacity and the fact that Australian businesses have refocussed their operations to increase domestic supply in response to COVID-19.
Subparagraph 3(c) of the Schedule to the By-law covers all soaps of heading 3401 of Schedule 3 of the Customs Tariff Act.
Subparagraph 3(d) of the Schedule to the By-law covers COVID-19 test kits and reagents used in the procedures to detect the novel coronavirus that causes COVID-19.
Consultation
The following Australian Government Departments were consulted in relation to by‑law 2020321.
- Department of Industry, Science, Energy and Resources
- Department of Foreign Affairs and Trade
- Department of the Prime Minister and Cabinet
- Department of Health
- Department of the Treasury
Commencement
This By-law commences on 1 January 2021.
Overview
The Customs By-law No. 2020321, enacted under the Customs Act 1901, addresses the urgent need to facilitate the import of medical and hygiene products essential for combating the COVID-19 pandemic. This by-law, which was developed in consultation with various Australian government departments including the Department of Health and the Department of Industry, Science, Energy and Resources, aims to ensure the availability of necessary products by exempting them from customs duty during a critical period. By reducing the duty rate to "Free" for specified products from January 1, 2021, to June 30, 2021, the by-law supports the national response to the pandemic, ensuring that critical medical supplies are accessible without the financial barrier of customs duties.
Scope and Application
The Customs By-law No. 2020321 applies to the importation of specific medical and hygiene products necessary for the response to the COVID-19 pandemic. It is a temporary measure that sets the rate of duty on these goods to "Free" for the period beginning on 1 January 2021 and ending on 30 June 2021. This by-law applies to imported goods listed in Schedule 3 of the Customs Tariff Act and for which there is no other Schedule 4 concession available, including Item 50 Tariff Concession Orders. The by-law specifically includes Personal Protective Equipment such as facemasks, gloves, and goggles, disinfectant preparations suitable for surface or object disinfection, and COVID-19 test kits and reagents, but explicitly excludes hand sanitisers due to the existing domestic manufacturing capacity. The by-law is applicable across Australia, in line with the broader jurisdictional reach of the Customs Act 1901, and it does not extend or restrict its application through subordinate instruments. The by-law was developed following consultations with multiple Australian government departments to ensure comprehensive and coordinated support for the national response to the COVID-19 pandemic.
Key Provisions
The Customs By-law No. 2020321 (the By-law) primarily seeks to provide a temporary reduction in the duty rate on certain medical and hygiene products imported during the COVID-19 pandemic. Under Section 271 of the Customs Act 1901, the Comptroller-General of Customs is authorised to make by-laws for items prescribed in a Customs Tariff. In this case, the By-law applies to medical and hygiene products relevant to the COVID-19 pandemic, specifically those listed in the Schedule of the By-law, and sets their duty rate to “Free” for the period from 1 January 2021 to 30 June 2021.
The By-law imposes obligations on importers of these specified goods, ensuring that they qualify for the zero duty rate if they meet the criteria outlined in the Schedule. Importers must provide the necessary documentation to Customs to demonstrate that the goods are indeed the prescribed medical or hygiene products and are intended for use in combating COVID-19. This includes ensuring that the products are listed in the Schedule and meet the descriptions provided. Failure to comply with these obligations could result in the goods being subject to the usual duty rates applicable under the Customs Tariff Act 1995.
For breaches of the By-law, the Customs Act 1901 stipulates that there can be significant penalties. Under Section 287 of the Act, a person who contravenes a by-law may be liable to a penalty of up to 10,000 penalty units, which currently equates to approximately AUD 1.85 million. Additionally, under Section 288, any goods involved in the contravention may be forfeited to the Commonwealth, and the importer may be subject to criminal prosecution. These penalties underscore the importance of compliance with the By-law for all parties involved in the importation of the specified goods during the prescribed period.