EXPLANATORY STATEMENT
Customs By-law No. 2100131
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 57C 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 57C 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 July 2021 and ending at the end of 30 June 2022.
Instrument
By-law 2100131 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’. 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 of the Schedule to the By-law sets out a list of the medical or hygiene products to which by-law 2100131 applies. Subparagraph 2(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 2(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 2(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 2(c) of the Schedule to the By-law covers all soaps of heading 3401 of Schedule 3 of the Customs Tariff Act.
Subparagraph 2(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 2100131.
- 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 July 2021.
Overview
The Customs By-law No. 2100131, enacted under the Customs Act 1901, addresses the urgent need to facilitate the importation of essential medical and hygiene products during the COVID-19 pandemic. The by-law was introduced to ensure that critical items such as personal protective equipment, disinfectants, and COVID-19 test kits are accessible without incurring customs duties, thereby supporting Australia's response to the pandemic. The by-law, which was developed following consultations with relevant government departments, aims to reduce the financial burden on importers of these crucial goods and to ensure their timely availability to combat the spread of COVID-19. The policy objective is to support public health efforts by making these items more affordable and accessible during a public health crisis.
Scope and Application
The Customs By-law No. 2100131, made under Section 271 of the Customs Act 1901, applies to medical and hygiene products that are specifically designated for use in combating COVID-19, which are imported into Australia. These products include a range of personal protective equipment such as face masks, gloves, and protective clothing, as well as disinfectant preparations suitable for surface disinfection, excluding hand sanitisers which are not covered due to existing domestic manufacturing capacity. The by-law, which is effective from 1 July 2021 and will remain in force until 30 June 2022, sets the duty rate on these prescribed goods to 'Free', thereby exempting them from customs duty during the specified period. The by-law applies nationally across Australia and is applicable to any entity or person importing the specified goods during the operational period of the by-law. The by-law is subject to consultation with various Australian Government Departments including the Department of Industry, Science, Energy and Resources, and the Department of Health, ensuring that the measure aligns with national health and industrial strategies.
Key Provisions
The Customs By-law No. 2100131, which commenced on 1 July 2021, sets out the duty rates for certain medical and hygiene products imported into Australia in response to the COVID-19 pandemic. As per section 271 of the Customs Act 1901, the by-law is designed to implement a temporary duty rate of "Free" for specified medical products and hygiene products necessary for combating COVID-19. This is a temporary measure that applies to imports between 1 July 2021 and 30 June 2022. According to the Customs Tariff Act 1995, these products are specifically listed in the Schedule to the by-law, which includes personal protective equipment (PPE), disinfectant preparations, soaps, and COVID-19 test kits and reagents.
Under the by-law, the Comptroller-General of Customs is authorised to reduce the duty rates of these specified medical and hygiene products to "Free". The by-law applies to goods listed in Schedule 3 of the Customs Tariff Act that have a duty rate other than "Free" or do not have any other concession available under Schedule 4. This includes various types of PPE, such as facemasks, gloves, and protective clothing, as well as disinfectant products capable of disinfecting surfaces or objects of the novel coronavirus that causes COVID-19, excluding hand sanitisers. The exclusion of hand sanitisers reflects Australia's significant domestic manufacturing capacity and the redirection of operations to meet local demand.
The obligations imposed by this by-law are primarily on importers and Customs brokers. Importers must ensure that the goods they are importing are correctly classified under the by-law and that the appropriate duty rates are applied. Customs brokers are responsible for facilitating the import process and ensuring compliance with the duty rates set out in the by-law. Failure to comply with the duty requirements may result in civil or criminal penalties, including fines and potential imprisonment. The exact penalties for breaches of the Customs Act are detailed in the Act itself and can vary depending on the nature and severity of the offence.
In terms of penalties, breaches of the Customs Act, including non-compliance with the duty rates set out in the by-law, can result in significant consequences. Civil penalties may include fines of up to $22,200 for individuals and $111,000 for corporations, as per section 286 of the Customs Act. Additionally, criminal penalties can apply, with maximum penalties including fines of up to $55,500 for individuals and $277,500 for corporations, along with potential imprisonment for up to five years. These penalties underscore the importance of compliance with the by-law and the broader Customs Act.