EXPLANATORY STATEMENT
Customs By-law No. 2041552
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 57A 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 Coronavirus disease 2019 (COVID‑19), are dutiable at the rate of “Free”. Item 57A 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 August 2020 and ending at the end of 31 December 2020.
Instrument
By-law 2041552 covers certain medical products and hygiene products imported as part of the response the COVID-19 pandemic. The by-law will reduce to “Free” the rate of duty on prescribed medical products or hygiene products required in the immediate response to the COVID‑19 pandemic. 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 2 sets out a list of the medical or hygiene products to which by-law 2041552 applies. Paragraph 2(a) covers a range of Personal Protective Equipment capable of limiting the transmission of organisms to humans. Goods covered in this Part include facemasks, gloves, clothes or gowns, goggles, eyeglasses, eye visors or face shields, of any material.
Paragraph 2(b) 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.
Paragraph 2(b) does not cover disinfectant products of 3808 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.
Paragraph 2(c) covers all soaps of 3401 of Schedule 3 of the Customs Tariff Act.
Paragraph 2(d) 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 2041552.
- Department of Industry, Science, Energy and Resources
- Department of Foreign Affairs and Trade
- Department of Prime Minister and Cabinet
- Department of Health
- Department of Agriculture, Water and the Environment
Commencement
By-law No. 2041552 was signed on 29 July 2020 and is deemed to have taken effect on 1 August 2020.
Overview
The Customs By-law No. 2041552, enacted under the Customs Act 1901, addresses the need to facilitate the import of essential medical products and hygiene products required in the immediate response to the COVID-19 pandemic. This by-law, signed on 29 July 2020 and deemed effective from 1 August 2020, aims to reduce the rate of duty on certain specified goods to "Free" for the period beginning on 1 August 2020 and ending at the end of 31 December 2020. The policy objective is to ensure the availability of critical supplies necessary for combating the COVID-19 pandemic by easing the financial burden on importers. The by-law was developed in consultation with various Australian government departments, including the Department of Industry, Science, Energy and Resources, and the Department of Health, reflecting a coordinated effort to support the national response to the pandemic.
Scope and Application
The Customs By-law No. 2041552, enacted under section 271 of the Customs Act 1901, applies to specific medical and hygiene products that are critical in the response to the COVID-19 pandemic. This by-law sets the duty rate to "Free" for prescribed medical products or hygiene products required for combating the novel coronavirus that causes COVID-19. The by-law specifically targets imported goods listed in Schedule 3 of the Customs Tariff Act, ensuring that these essential items are not subjected to customs duties. This measure is applicable during the period from 1 August 2020 to 31 December 2020. Notably, the by-law does not apply to hand sanitisers, which are excluded due to the significant local manufacturing capacity in Australia. This exclusion is aimed at supporting domestic production and supply of hand sanitisers to meet the heightened demand during the pandemic. The by-law extends to various products, including Personal Protective Equipment, disinfectant preparations for surfaces, all soaps, and COVID-19 test kits and reagents, thereby facilitating the importation of these crucial items without incurring customs duties.
Key Provisions
Customs By-law No. 2041552, made under the Customs Act 1901, primarily addresses the temporary reduction of customs duty rates for specific medical and hygiene products pertinent to the COVID-19 pandemic. Section 271 of the Act allows the Comptroller-General of Customs to make by-laws for items in the Customs Tariff, and in this case, the by-law sets the rate of duty on certain medical and hygiene products to "Free" during the specified period (s. 271). This by-law is essential for facilitating the importation of critical supplies needed to combat COVID-19.
The by-law imposes specific obligations on importers, manufacturers, and other stakeholders involved in the supply chain of the listed medical and hygiene products. Importers must ensure that the goods they are importing fall under the categories specified in the by-law, which includes personal protective equipment (PPE) such as facemasks, gloves, and face shields, disinfectant preparations, and COVID-19 test kits (s. 2(a)-(d)). Additionally, the by-law mandates that these products must be used in the immediate response to the COVID-19 pandemic to qualify for the duty exemption. Importers and manufacturers are required to maintain proper documentation to substantiate their claims for duty exemptions.
Failure to comply with the provisions of this by-law could result in civil or criminal consequences. The Act provides for various penalties for non-compliance, which can include fines and, in severe cases, imprisonment. The specific penalties are not detailed in the explanatory statement, but they generally align with those provided under the Customs Act 1901 and the Customs Tariff Act 1995. These penalties are designed to ensure adherence to the by-law's stipulations and to maintain the integrity of the customs duty exemption system.
Overall, Customs By-law No. 2041552 aims to expedite the flow of essential medical and hygiene products into Australia by eliminating customs duty on these items. It does so by clearly defining the types of products eligible for the duty exemption and imposing obligations on relevant parties to ensure that these products are used for their intended purpose during the pandemic. The potential penalties for non-compliance underscore the importance of adhering to the by-law's requirements.