EXPLANATORY STATEMENT
Customs By-law No. 2200083
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 item 57 to Schedule 4 to the Customs Tariff Act, goods, as prescribed by by-law, that are goods that are medical products or hygiene products or that are ingredients or containers for medicaments or other goods that if imported would be classified to Chapter 30 of Schedule 3 to the Customs Tariff Act, are dutiable at the rate of ‘Free’.
Instrument
By-law No. 2200083 prescribes goods that are active ingredients for the manufacture of medicaments, vaccines and other goods classified to Chapter 30 to the Customs Tariff Act used in the treatment, prevention or to limit the severity of the disease known as COVID‑19. For the purposes of this by‑law active ingredients are those that give the final medicament, vaccine or other goods of Chapter 30 its therapeutic or prophylactic effect.
Consultation
The Department the Prime Minister and Cabinet and the Department of the Treasury were consulted on the development of this measure.
Commencement
By-law No. 2200083 commences on 1 July 2022.
Overview
The Customs By-law No. 2200083 was enacted in 2022 to address the need for expeditious customs duty relief on active ingredients essential for the production of medicaments, vaccines, and other therapeutic goods classified under Chapter 30 of the Customs Tariff Act 1995, specifically in response to the COVID-19 pandemic. This by-law operates under the authority conferred by Section 271 of the Customs Act 1901, which empowers the Comptroller-General of Customs to make by-laws prescribing goods for which certain customs duties apply. The policy objective is to facilitate the importation of these critical ingredients without the burden of duty, thereby supporting the timely production and availability of treatments and vaccines.
The enactment of this by-law was overseen by the relevant federal authorities, including the Department of the Prime Minister and Cabinet and the Department of the Treasury, which were consulted during the development phase to ensure the measure aligns with broader economic and health policy objectives. This legislative instrument is designed to take immediate effect from 1 July 2022, underscoring the urgency and importance of the matter.
Scope and Application
The Customs By-law No. 2200083, made under Section 271 of the Customs Act 1901, applies to goods classified as medical products, hygiene products, or ingredients and containers for medicaments specifically used in the treatment, prevention, or reduction of the severity of COVID-19. These goods are prescribed by the by-law to be dutiable at the rate of ‘Free’. The scope of the by-law encompasses any entities or individuals importing these specified goods into Australia. The by-law is geographically applicable within the Commonwealth of Australia, extending its jurisdiction to all territories and states under the authority of the Customs Act 1901. This by-law does not explicitly state any exclusions or exemptions, but it operates within the framework of the Customs Tariff Act 1995, which provides for the calculation of concessional duty. The by-law came into effect on 1 July 2022, as stated in the instrument, and any further application or restrictions are likely to be detailed in subordinate instruments or future legislative amendments.
Key Provisions
The main operative sections of By-law No. 2200083 prescribe that specific goods, such as active ingredients used in the manufacture of medicaments, vaccines, and other goods classified under Chapter 30 of the Customs Tariff Act, intended for the treatment, prevention, or mitigation of COVID-19, are dutiable at the rate of 'Free' (section 1). This prescription is made under section 271 of the Customs Act 1901, which allows the Comptroller-General of Customs to enact by-laws for items specified in a Customs Tariff (section 271). The Customs Tariff Act 1995, being an Act imposing duties of customs, serves as the relevant Customs Tariff (section 4).
This by-law imposes specific obligations on importers and manufacturers of goods related to COVID-19 treatments and preventative measures. It requires that these goods be declared and subject to duty calculations according to the by-law’s provisions. Specifically, active ingredients used in the production of medicines, vaccines, or other Chapter 30 goods for COVID-19 are to be exempt from customs duties (section 1). These entities must ensure that their goods are correctly classified and declared to benefit from the duty-free status under this by-law.
Non-compliance with the provisions of By-law No. 2200083 can result in several consequences. Firstly, there may be financial penalties imposed, including the payment of the applicable duty that would have been exempted under this by-law. The by-law itself does not explicitly state the maximum penalties for breaches, but under the Customs Act 1901, penalties for non-compliance can include fines and, in severe cases, imprisonment (section 229). The precise penalty would depend on the nature and severity of the breach, as well as other relevant laws and regulations.
The by-law also provides for the seizure of goods that do not comply with its provisions, which can further impact the importing entities by disrupting their supply chains and incurring additional costs related to the storage and disposal of the seized goods. Importers and manufacturers must therefore ensure strict adherence to the by-law to avoid these civil and potential criminal consequences.