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It was the intent to make it clear that a determination of comparative value would be appealable in the same way as the determination of export value or value based on other criteria.
Mr. CURTIS of Nebraska. And it means the United States Customs Court?
Mr. ROSE. Yes, sir.
Mr. CURTIS of Nebraska. Do they try the matter de novo?
Mr. ROSE. What happens is that in any determination of value, as I understand it, the appraiser makes his determination. If the importer disagrees with it, he may appeal and then the burden is on him to establish a different value than the one fixed by the appraiser as the one governing under the law. Our concept of this would be that the same thing would happen in this case.
Mr. CURTIS of Nebraska. In other words, it is your intention that the right to appeal from the appraiser to the Customs Court which is now permitted under present valuation procedures shall be applied in all the new procedures set forth in this bill.
Mr. ROSE. Exactly.
Mr. CURTIS of Nebraska. And the court is not called upon to find the value in any other way than resorted to now?
Mr. ROSE. I think that some people would say that the thing that the court may be called on to do may be different from the determination of export value or foreign value, but it is different only in that it is new. It is not different in kind in our view. In other words, they are determining the facts relating to whether or not there is comparable merchandise and so on for determination of value.
Mr. CURTIS of Nebraska. Of course, the appraiser will arrive at a flat value for something?
Mr. ROSE. That is correct.
Mr. CURTIS of Nebraska. And it is not like an appeal in some other matters. There is no record to show how he arrived at his conclusion.
Mr. ROSE. That is true now. He just comes out at a figure and then it is up to the importer to establish that some other figure is not the governing one.
Mr. CURTIS of Nebraska. It is intended that there is an appeal from the Customs Court to the United States Court of Customs and Patent Appeals?
Mr. ROSE. Yes, sir; we have intended to make no change in that. Of course, that appeal lies primarily on questions of law now.
told it is solely on questions of law.
Mr. CURTIS of Nebraska. And that remains just as is.
Mr. ROSE. Exactly.
Mr. CURTIS of Nebraska. Nothing added or detracted?
Mr. ROSE. No, sir.
Mr. CURTIS of Nebraska.
Same grounds of appeal as now exist.
Mr. CURTIS of Nebraska. In order that we can clear it up and understand this procedure business, the phrase or the appropriate. court" only appears in the subsection pertaining to comparative value. Mr. ROSE. That is correct, and it is for the reason that I mentioned. Mr. CURTIS of Nebraska. It is not necessary. It is the law already in reference to the others.
Mr. ROSE. Of course, historically there was no question in anybody's mind that there was an appeal from the determination of export value or foreign value or United States value, because that has been going on for many, many years. But a question was raised as to whether or not a determination of value based on this comparative value notion would be appealable. It was because that doubt was raised that this insertion was made. I think it may have left us in a slightly inartistic drafting situation.
Mr. CURTIS of Nebraska. But it is not the intent to take away the right to appeal to the Customs Court under these other methods. Mr. ROSE. Not in any way.
Mr. CURTIS of Nebraska. That is all, Mr. Chairman.
Mr. JENKINS. Mr. Utt will inquire.
Mr. UTT. On page 23, Mr. Rose, line 23, there is a limitation of $10 in case of articles accompanying for the personal or household use of persons arriving in the United States who are not entitled to any exemption from duty or tax under paragraph 1798.
Mr. ROSE. Who are not entitled.
Mr. UTT. Does that in any way affect the present regulation of persons returning from Mexico who now have an exemption of $300 if they are there for over 48 hours?
Mr. ROSE. Put it this way. 1798 (c) (2) is the travelers' exemption. This section 321 refers to persons arriving in the United States who are not entitled to any exemption from duty or tax under 1798 (c) (2). That is the travelers' exemption. The $200 and $300 basic travelers'
exemptions are continued by this.
Mr. UTT. That is all, Mr. Chairman.
Mr. BYRNES. I would like to refer to section 15 also and compare it with a similar section, section 11 of H. R. 5505. As I view those two sections, you made two changes in amounts. In the first place, you changed differences that could be disregarded in section 13 of the new bill of $3 and the old bill, H. R. 5505, of $5; is that correct? Mr. Rose. That is correct.
Mr. BYRNES. And in the area of goods that can be shipped in under subsection (2) of subsection (b), you now suggest $3 and the bill H. R. 5505 was $5. Those are the dollar changes.
Mr. ROSE. That is correct.
Mr. BYRNES. The $10 area is the same.
Mr. ROSE. They are not defined in quite the same way. The bona fide gift provision is new. The basic concept of $10 of accom
panied merchandise was in both bills.
Mr. BYRNES. The old section 11 did not have anything about bona fide gifts?
Mr. ROSE. That had $10 for personal use.
Mr. BYRNES. You continue that $10 for personal use?
Mr. ROSE. Only if it is accompanied.
Mr. BYRNES. Those changes I can understand. The rest of the changes that you made I do not understand. What was wrong with the original section 11? For instance, we had in section 11 the restriction on c. o. d. packages. Mr. Johnson remembers that we went over this at some length during the executive meetings of the committee, in connection with the old H. R. 5505. We spent a lot of time on the language and the restrictions we were going to write into the
act. One was the c. o. d. proposition. This was designed to avoid the setting up of mail-order houses which were of considerable concern to some people. You have nothing in your bill on this at all. I am wondering why.
Mr. ROSE. I will ask Mr. Johnson to supplement what I say, but the reduction to $3 was partially to meet the controversy that you refer to. We also have in this bill a proposal for the reduction of that $3 in particular classes of cases or broadly by the Secretary of Treasury by regulation.
Mr. BYRNES. There are certain restrictions you admit you are going to put on right off the bat. There is one on tobacco and liquor. Mr. ROSE. That is right.
Mr. BYRNES. Why should that not be written into the bill just as we had it in the language of section 11 of the old bill that was passed by the House?
Mr. ROSE. Certainly the specific ones that are agreed on now could be written in. I think the theory of not doing so, but leaving it to regulation is that this, after all, is a de minimis provision or intended as such. This is not intended as a commercial provision to foster types of business growing up based on this $3 exemption.
Mr. BYRNES. It is not intended for that, Mr. Rose, but a lot of times what you intend and what the effect is are different.
Mr. ROSE. I understand that. It seemed a better way of accomplishing the purpose, and also preventing misuse because when you get into how to define what might be done you are in an area of considerable difficulty, I think, an area where considerable experimentation to come out at the de minimis result and at the same time to achieve the other result may be required. It was our thought, and again we are not rigid about it, that this was a preferable approach. Mr. BYRNES. Let me ask you something specific. In H. R. 5505 we provided in section 11 in connection with the importation of items, that the privilege of that section would not be granted to any c. o. d. shipper or in any case in which merchandise covered by a single order or contract is forwarded by separate lots. Is there any objection to inserting that in your new section 13.
Mr. ROSE. I would like to consider that a little further but I see none at this time.
Mr. BYRNES. I think what some people are concerned about is the setting up of mail-order businesses on small items operating out of Canada or Mexico, or even operating out of a foreign trade zonethey could operate right in this country out of a trade zone. We are all familiar with these mail-order people that carry on a business in novelties, more or less. Some people are concerned that businesses of that nature will be set up in Canada, in Mexico, or in the free zone. This section would set them up in business.
Mr. ROSE. Of course, that is not our intention. I am sure that full consideration ought to be given to the problem. As I see it now, I see no objection to expanding this to put in specific safeguards against things which are clearly defined as not within the intention of the $3 exemption as it now stands. I do think we need the flexibility of the additional ability to control by regulation, because I do not think you can foresee everything along that line that might develop.
Mr. BYRNES. I think that is correct. We provided in the old section 11 for further regulation by the Department if found advisable.
I was wondering why the restrictions that the committee saw fit to put in only 2 years ago in the drafting of this section were eliminated in the new drafting and whether you had some real reason.
Mr. ROSE. It was primarily because of the fact that the amount being smaller this is a question on which again we would be interested in all the information we could get the danger of what you describe was less.
Mr. BYRNES. On page 23, Mr. Rose, I am interested in the meaning of subparagraph (b) beginning on line 13. It states there
that to admit articles free of duty and any tax imposed on or by reason of importation when the expense and inconvenience of collecting the duty accruing thereon would be disproportionate to the amount of such duty, but the aggregate value of the article imported by one person on one day and exempted from duty shall not exceed
and then you go into the $10 cases. Do I understand that to mean that the Bureau can use its own judgment as to whether the $10 item which is sent as a bona fide gift or a $10 item accompanying a person shall have a duty assessed against it or not? It seems to me you left a loophole here when you say that that shall apply when the expense and inconvenience of collecting the duty accruing thereon would be disproportionate to the amount of such duty. Does that mean, then, that you can decide that the expense and inconvenience is not disproportionate and levy a duty on an article coming in as a bona fide gift of $10.
Mr. ROSE. Yes. As I read that provision, it sets out a principle, namely, that this is applicable in principle to situations where we are spending a dollar to collect 50 cents. Not in an individual situation, but in a class of transactions, perhaps. But the places where we can apply that principle, of the limits within which we can apply that principle, are fixed by the ceiling of $10 and $3.
Mr. BYRNES. This section, then, does not mean that a person can be certain that if he brings in an article not exceeding $10 in value that no duty will be levied?
Mr. ROSE. That is correct. That, I think, has been in the law since the 1938 amendment, discretion both in individual collectors and in the Secretary of the Treasury to limit the $5 and $1 provisions presently in the law.
Mr. BYRNES. And that also related to the $3.
Mr. ROSE. Exactly.
Mr. BYRNES. Does not that lead to uncertainty? Here I am going into Canada, and then I come back and I have this article of $10. I do not know whether I am going to be charged a duty on that or not. It all depends on whether the fellow at the customs house decides it is too convenient or too expensive for him to charge the duty.
Mr. ROSE. Of course, we would not expect to administer it on a capricious basis like that. The two ways in which this discretion would be exercised, and I think this is true now, would be first by broad regulations published by the Secretary of the Treasury in usual form, which would put people on notice as such regulations now do, and the other is local determinations to take into account the variety of local conditions that I understand exist in various border situations. That is true now. I do not believe that it is causing uncertainty or hardship. Collectors at different parts of the border by reason of different local commercial situations have adopted and are enforcing
different sets of rules regarding the $5 and $1 exemptions which now exist. So I do not think we are running into any new area of uncertainty or capriciousness here.
Mr. BYRNES. We did not have that in section 11 of H. R. 5505, did we?
Mr. ROSE. Have you got H. R. 5505 before you?
Mr. BYRNES. Yes, sir.
Mr. ROSE. I am not sure what draft this is. Are we looking at the same draft, September 27, 1951?
Mr. BYRNES. Yes, sir.
Mr. ROSE. On page 16 there is section (c) which I believe is identical with the corresponding provision in the present section.
Mr. BYRNES. But you established a general rule that you just let in all items under $10.
Mr. ROSE. Look at (b) on page 15:
subject to such exceptions and such regulations as the Secretary of the Treasury shall prescribe.
Mr. BYRNES. It is a reverse approach.
Mr. ROSE. It is differently stated.
Mr. BYRNES. In section 11 it seems to me we tried to state as a general flat rule what we expected, and then we say you could make exceptions. In your case you are starting out with the exceptions.
Mr. ROSE. I think the difference in the method of statement is accounted for by the circumstance that you referred to. There was concern about the commercial effect of the exemptions, and it was thought that concern might be somewhat allayed by a clear statement of the philosophy of this, which is, as I put it, not spending a dollar to collect 50 cents, and not a blanket 10-10-3 exemption, but simply a means given to the Treasury to avoid unduly expensive procedures which were not compensated for by the revenue collected.
Mr. BYRNES. The only point I was trying to make was that I think we would be better off in most cases if we were definite and certain of what we have in the law, both by way of the general principle involved and also by way of the specific exemptions.
Mr. ROSE. I agree with you thoroughly. Certainty, particularly in this field, is a highly desirable thing. I do not think that this section looks in the direction of any more uncertainty than we either have now or the substance of what was contemplated by the corresponding section of 5505.
Mr. BYRNES. I wonder why you did not take the sections of the old bill which the committee went over quite thoroughly in 1951.
Mr. ROSE. Of course, this particular section, as you know, was a subject of considerable controversy not only here, but when testimony was taken before the Senate committee. Particularly in the light of that later development, it was thought that a restatement might clarify the actual objective.
Mr. BYRNES. Thank you.
Mr. SADLAK. I have only one question, Mr. Rose, and I would like you to comment if you desire. You do not have to necessarily. I received a letter yesterday which is a very strong letter, and asks for immediate approval of H. R. 5106. Perhaps my colleagues received the same letter. It is from New York. It states: