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merchandise and enumerates the means which the customs officer may use to segregate the respective classes of commingled merchandise. The amendment would extend the period during which the segregation must be accomplished to 30 days after the date of personal delivery or mailing of written notice to the consignee that the merchandise is commingled. Furthermore, the Secretary would be authorized in his discretion to extend the period. The proposed amendment would except from the operation of this section any part of the shipment when the collector is satisfied by proof furnished by the consignee or his agent that such part is commercially negligible, is not capable of segregation without excessive cost, will not be segregated prior to its use in a manufacturing process or otherwise, and was not commingled to avoid the payment of lawful duties. Any merchandise meeting all these conditions shall be considered subject to the next lower rate of duty (including a free rate of duty) applicable to the merchandise with which it is commingled.
Section 21. Correction of errors and mistakes
Section 520 (c) (1) of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1520 (c) (1)), provides that notwithstanding the fact that a valid protest was not filed, the Secretary of the Treasury may authorize a collector to reliquidate an entry to correct a clerical error in any entry or liquidation which is discovered within one year after the date of entry or within 60 days after liquidation when liquidation is made more than 10 months after the date of entry. Section 21 (a) of the bill would amend section 520 (c) (1) to extend this relief provision to cover situations involving clerical errors, mistakes of fact, or any other inadvertence not amounting to an error in the construction of a law, in any entry, liquidation, appraisement, or other customs transaction, when such error, mistake, or other inadvertence is adverse to the importer and is manifest from the record or established by written evidence.
Section 520 (c) (2) of the Tariff Act permits the reliquidation of an entry to correct an assessment of duty on household or personal effects which by law were not subject to duty. Section 21 (b) of the bill would amend section 520 (c) (2) to permit correction of assessments of duty on household or personal effects which are subject to duty.
Section 22. Conversion of currency
Section 522 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 31, sec. 372) provides that the Secretary of the Treasury shall proclaim quarterly "the values of the standards coins in circulation of the various nations of the world," based upon estimates of the Director of the Mint. It further provides that the Federal Reserve Bank of New York shall make daily certifications of commercial rates of exchange based upon market rates in New York, and that currency conversion for customs purposes shall be made in accordance with these certifications whenever the certified rates vary by 5 percent or more from the metallic rates proclaimed by the Secretary of the Treasury.
Section 22 of the bill would amend section 522 to repeal the requirement that the Secretary proclaim the metallic rates. It would further amend section 522 to provide that the Secretary keep current a published list of par values which he finds are maintained by foreign countries for their respective currencies. These par values would be used whenever for customs purposes it is necessary to convert into an amount in United States currency any amount expressed in foreign currency, except when there are 1 or more rates of exchange which vary by more than 5 percent from the par value. In such a case, the list would indicate the existence of such rates and the applicable rate would be the rate certified by the Federal Reserve Bank of New York. Where no par value is maintained for any currency, the applicable rate of exchange would be the rate certified by the Federal Reserve Bank of New York.
The proposed section 522 (c) provides for the certification of multiple rates of exchange where they exist and permits the application of the rate among those certified which reflects the commercial value of the foreign currency as related to the import in question.
Subsections (b) and (c) of section 22 of the bill would repeal the statutory requirement that invoices state the kind of currency, "whether gold, silver, or paper."
Section 23. Transfers of goods in bonded warehouse
Section 557 (b) of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1557 (b)), permits the transfer of the right to withdraw goods in bonded warehouses and makes such transfers irrevocable in cases where the
transferee, in the bond provided for in that section, assumes the customs obligations of the transferor with respect to the transferred merchandise. It further provides that the transferee is entitled to receive all refunds of moneys paid by him and shall have all rights to file protests under section 514 of the Tariff Act of 1930, "which would otherwise be possessed by the transferor."
Judicial interpretations of section 557 (b) have conferred new rights of protest on transferees and necessitated liquidations and increased record keeping in behalf of such persons. Section 23 of the bill would amend section 557 (b) to provide that all transfers shall be irrevocable; that in the case of each transfer the transferee shall file a bond undertaking to pay all unpaid duties, taxes, charges, and exactions on the merchandise the subject of the transfer; and that a transferee shall have no right to file a protest under section 514, or to a separate liquidation in his behalf, unless the rate of duty, tax, charge, or exaction has been changed pursuant to statute or proclamation on or after the date on which the right to withdraw the merchandise was transferred to him.
Section 24. Customs supervision
Section 24 would add a new section to the Tariff Act of 1930 to permit the Secretary of the Treasury in his discretion to determine the degree of supervision by customs officers to be maintained with reference to activities which are required to be under direct customs supervision.
Section 25. Saving clause
This section is intended to maintain the status quo on rights and liabilities already accrued under acts which would be repealed or modified by the bill.
Mr. ROSE. I would also like to offer at this time a tabulation which we have prepared which simply sets forth in factual form the differences between H. R. 5106 and H. R. 5505 in the form in which it passed the House in 1951.
I thought that would also be of convenience to the committee. Mr. JENKINS. Yes, it will be admitted without objection at this point.
(The document is as follows:)
CUSTOMS SIMPLIFICATION ACT OF 1953 (H. R. 5106)
The following is a comparison of H. R. 5106 with the Customs Simplification Act of 1951 (H. R. 5505, 82d Cong.), which was passed by the House of Representatives on October 15, 1951. The sections to which the sections of H. R. 5106 are compared are those of H. R. 5505, 82d Congress, as passed by the House.
Section 1. Table of contents.
Section 2. Repeal of obsolete accounting provisions: New. explanation,1 page 16.
Section 3. Effective dates of rates of duty: New. See summary explanation, page 17.
Section 4. Marking.
Section 4 (a): Same as section 3 (a).
Section 4 (b): Same as section 3 (b) and in addition repeals sections 2885 and 2886 of the Revised Statutes. See summary explanation, page 18.
Section 4 (c): New. See summary explanation, page 18.
Section 5. Transportation of lead-bearing and zinc-bearing ores: New. See summary explanation, page 19.
Section 6. Repeal of certain obsolete reciprocal provisions: Same as section 4. Section 7. American goods returned: Same as section 5.
Section 8. Free entry provision for travelers: Same as section 6 except subsection (e) which is new. See summary explanation, page 20.
Section 9. Free entry for noncommercial exhibitions: Same as section 7, except for a drafting change.
Section 10. Temporary free entry for samples and other articles under bond. Section 10 (a): Section 8 of H. R. 5505 amended section 308 of the Tariff Act relating to temporary free entry under bond, to permit an extension to 3 years
1 Summary explanation of H. R. 5106, Customs Simplification Act of 1953, issued by Committee on Ways and Means, May 13, 1953.
of the original bond period of 6 months. Subsection (a) of the new draft will also permit the extension to 3 years and in addition provides for an original bond period of 1 year instead of 6 months.
Section 10 (b): New. See summary explanation, page 21.
Section 10 (c): Same as section 8 (b) except that "horses" has been deleted from the amendment of section 308 (5). Horses are now included in subsection (d).
Section 10 (d): New. See summary explanation, page 21.
Section 10 (e): New.
See summary explanation, page 21.
Section 10 (f) (g) (h): Drafting changes made necessary by the amendment proposed by subsection (e).
Section 11. Supplies and equipment for vessels and aircraft: This section is almost identical with section 9. It has been revised to (1) make it applicable to all vessels of the United States Government (formerly limited to vessels of war); and (2) include supplies and equipment withdrawn from a foreign-trade zone. Section 12. Drawback.
Section 12 (a): New. See summary explanation, page 21.
Section 12 (b): Similar to section 10 (a) of H. R. 5505 in that it would authorize the refunding of duties in cases where the merchandise upon which the duties have been paid was sent to the consignee without his consent and would extend the period during which the merchandise can be returned to customs custody for exportation from 30 to 90 days. In addition, the new draft would authorize the Secretary to permit additional extension of time where 90 days is insufficient. Section 12 (c): New. See summary explanation, page 22.
Section 13. Administrative exemptions: This section is a revision of section 11. The revision would authorize the Secretary of the Treasury to disregard differences of less than $3 between duties or taxes deposited or assessed and the amount of duties actually accruing, as compared with $5 in H. R. 5505. Further, it would permit entry free of duty of (1) $10 of bona fide gifts from persons in foreign countries to persons in the United States; (2) $10 of articles for personal or household use and accompanying persons arriving in the United States who are not entitled to exemptions under paragraph 1798 (c) (2); (3) $3 in any other case. Under H. R. 5505, individuals would have been permitted to bring with them or import by mail up to $10 for their personal use and it would have allowed free entry up to $5 in other cases.
Section 14. International traffic and rescue work: Same as section 12. Section 15. Value: This section is almost identical with section 13. language changes of a clarifying nature have been made in the definitions of export value, United States value, comparative value and American selling price. The definition of "freely sold or offered for sale" has been amended to permit sales to exclusive agents and other restricted sales to come within the terms of export value where such limitations do not affect the price.
Section 16. Signing and delivery of manifests: Same as section 14.
Section 17 (a): Same as subsection (a) of section 15.
Section 17 (b): New. See summary explanation, page 23.
Section 17 (c): New. See summary explanation, page 23.
Section 17 (d) (e): Same as subsections (b) and (c) of section 15.
Section 17 (f): New. See summary explanation, page 24.
Section 18. Verification of documents: Same as section 16.
Section 19. Amendment of entries.
Section 19 (a): Same as section 17 (a).
Section 19 (b): Differs from section 17 (b) in that it repeals that part of section 489 of the Tariff Act which imposes undervaluation duties on importers.
Section 19 (c), (d), (e), (f): Same as subsections (c), (d), (e), and (f) of section 17. Section 20. Commingled merchandise: Same as section 18 except that the period during which the segregation of the merchandise must be accomplished is increased from 20 to 30 days, with authority in the Secretary to grant a longer period.
Section 21. Correction of errors and mistakes.
Section 21 (a): Same as section 19.
Section 21 (b): New. See summary explanation, page 25.
Section 22. Conversion of currency: This section in the main is identical with section 20. The changes are (1) in new section 522 (a) reference to the International Monetary Fund and to other international agreements is deleted and the Secretary is directed to maintain a list of par values which he finds are maintained
by foreign countries; (2) new section 522 (d) authorizes the listing and use of multiple rates of exchange which vary by more than 5 percent from the par value. section (c) of this section is new but is merely a clean-up of language. Section 23. Transfers of goods in bonded warehouse: New.
explanation, page 25.
Section 24. Customs supervision: Same as section 21.
Mr. ROSE. Perhaps the most important section of the Jenkins bill is section 15, which will simplify and make more equitable the formulas for appraising merchandise for the assessment of import duties. Briefly, under existing law, appraisers, in determining the value of imported merchandise, are directed to use "foreign_value" or the "export value," whichever is higher. "Foreign value" is defined as the market value at the time of exportation "at which such or similar merchandise is freely offered for sale for home consumption to all purchasers *in the usual wholesale quantities and in the ordinary course of trade." "Export value" is the market value in the foreign country of merchandise sold for exportation to the United States. If neither of these values can be ascertained, then the "United States value" is used, and if that also is unascertainable then the "cost of production". In a few special cases the rate of duty is to be based upon the "American selling price". Section 15 would amend section 402 to eliminate the use of "foreign value" and to make "export value" the preferred method of valuation if it can be ascertained; if neither "export value" nor "United States value" can be ascertained, appraisement would be made on "comparative value" before resort is had to "constructed value".
Mr. JENKINS. I understand that there is going to be some difference of opinion about this section, and for that reason I should like to suggest that the Treasury study the amendatory proposals offered at this hearing and, if there is an area of compromise, that we might be able to work it out.
I have had some dis
Mr. ROSE. I entirely agree, Mr. Jenkins. cussions with persons who have comments and criticisms to make on the proposal in section 15. I would like to say this: that our point of view in the matter is by no means hard minded or insistent on exact language or that this is the exact language to be used. I think it is generally agreed that this is a very difficult subject, and a subject on which some improvement is necessary. I think in some areas of the proposal in section 15, such as the elimination of foreign value, there is very little difference of opinion. The differences of opinion that I have heard relate primarily to the question of the introduction of the concept of comparative value. I will be very much interested in the testimony that I am sure will be offered on that subject.
Mr. JENKINS. I just wanted to bring that out because, from what I know about it, parties have indicated that there might be room for an area of conciliation so that we might be able to work out the matter. Mr. ROSE. We will be glad to discuss the section with anyone who is interested.
Mr. JENKINS. Very well. Proceed, please.
Mr. ROSE. Under the present law, a principal source of expense and delay in administration is the necessity of determining economic facts and conditions in a foreign country.
A report of December 31, 1952, indicates that over 43,000 invoices in the hands of appraisers for more than 90 days are delayed awaiting
a foreign investigation, and the great majority of these investigations are needed to determine foreign value. Delays of 2 or 3 years are not uncommon while awaiting the receipt of all the necessary foreign information. Elimination of "foreign value" and the substitution of "export value" as the preferred method will mean that value will depend principally upon transactions in the United States import trade, which should be known or should be readily ascertainable by importers and customs officers. In practical terms, this should mean less expense to the Government and speedier decisions for the importer.
"Constructed value," the final residual method, will continue to require not only information as to the economic conditions in the country of origin but also a type of cost accounting which is difficult to accomplish even in the United States, where cost accounting is carried to much greater refinement than in most foreign countries. Section 15 will restrict the use of "constructed value" very narrowly since it would make it possible for appraisers to estimate the "comparative value" from comparable merchandise in many cases in which value now must be determined on the basis of "cost of production."
Section 15 would also provide a system of valuation which is less likely to produce arbitrary and fictitious results, which increase uncertainty since it would provide for the use of actual commissions, profits, and other deductions and not an arbitrarily limited amount, in determining "United States value"; it would permit the use of actual sales instead of offers in determining "export value", "United States value" or "comparative value"; it defines "usual wholesale quantities" in such a manner as to mean the quantities in which the greater aggregate quantity of the merchandise is sold, whereas under the present law the usual wholesale quantity is the quantity in which the largest number of individual transactions occur.
The Treasury Department believes that section 15 of the bill will eliminate unnecessary expense and delay in the appraisement of merchandise, thereby achieving greater administrative efficiency, and will provide a system for all customs valuations which will be commercially realistic and equitable.
Section 4 of H. R. 5106 will repeal special marking requirements now contained in the Tariff Act which have proved unusually burdensome to importers. The paragraphs which would be amended by section 4 refer to specific items to be imported and (except in par. 28) specify in detail that the articles enumerated shall have, when imported, the name of the maker or purchaser as well as the country of origin conspicuously and indelibly marked on the outside of the article. Section 4 would repeal entirely these marking provisions. The amendment is, however, restricted to special marking requirements, and the articles would still be subject to the general marking provisions of the Tariff Act so that they will indicate to the ultimate purchaser the country of origin of imported merchandise. Special marking is not needed for consumer information in view of the general marking provisions, and its requirement often interferes with the efforts of United States medical men and scientists to get needed instruments for medical purposes and for research and with trade and commerce generally.