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JUNE 6 (legislative day, May 28), 1940.—Ordered to be printed
Mr. SCHWARTZ, from the Committee on Claims, submitted the
[To accompany S. 2171]
The Committee on Claims, to whom was referred the bill (S. 2171) for the relief of M. Seller & Co., having considered the same, report favorably thereon with the recommendation that the bill do pass with the following amendment:
Strike out all after the enacting clause and insert in lieu thereof the following: That the Secretary of the Treasury be, and he is hereby, authorized and directed to refund to M. Seller and Company, Portland, Oregon, certain penalties in the amount of $5,210.36, paid to the collectors of customs at Portland, Oregon, and Seattle, Washington, on April 28, 1927. Said penalties were incurred under the customs laws in the entry of certain merchandise from Germany at a less value than that returned upon final appraisement, such entry having been made without any intention to defraud the revenues of the United States or to conceal or misrepresent the facts of the case or to deceive the appraiser as to the value of the merchandise: Provided, That no part of the amount appropriated in this Act in excess of 10 per centum thereof shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with this claim, and the same shall be unlawful, any contract to the contrary notwithstanding. "Any person violating the provisions of this Act shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined in any sum not exceeding $1,000.
The bill, as amended, authorizes and directs the Secretary of the Treasury to refund to M. Seller & Co., Portland, Oreg., certain penalties in the amount of $5,210.36, paid to the collectors of customs at Portland, Oreg., and Seattle, Wash., on April 28, 1927.
In the first session of the Seventieth Congress a similar bill for relief of claimant, S. 2304, was favorably reported to the Senate from the Committee on Claims (S. Rept. No. 975, May 1, 1928, 70th Cong., 1st sess.).
In June 1920 claimant company purchased in Germany certain lots of decorated chinaware for importation and sale within the United States. Claimant previously had made several entries of goods of this character under paragraph 1, section 3, of the Tariff Act of October 3, 1913 (38 Stat. 184), which provided:
That the owner, consignee, or agent of any imported merchandise may, at the time when he shall make entry of such merchandise, but not after either the invoice or the merchandise has come under the observation of the appraiser, make such addition in the entry to or such deduction from the cost or value given in the invoice or pro forma invoice or statement in form of an invoice, which he shall produce with his entry, as in his opinion may raise or lower the same to the actual market value or wholesale price of such merchandise at the time of exportation to the United States, in the principal markets of the country from which the same has been imported; and the collector within whose district any merchandise may be imported or entered, whether the same has been actually purchased or procured otherwise than by purchase, shall cause the actual market value or wholesale price of such merchandise to be appraised; and if the appraised value of any article of imported merchandise subject to an ad valorem duty or to a duty based upon or regulated in any manner by the value thereof shall exceed the value declared in the entry, there shall be levied, collected, and paid, an additional duty of 1 percent of the total appraised value thereof for each 1 percent that such appraised value exceeds the value declared in the entry.
Such additional duties shall not be construed to be penal, and shall not be remitted nor payment thereof in any way avoided except in cases arising from a manifest clerical error, nor shall they be refunded in case of exportation of the merchandise, or on any other account, nor shall they be subject to the benefit of drawback. Under this provision claimant had made entry of similar goods at values varying either above or below the invoice values.
In the summer of 1920, following purchase of the goods here involved, claimant inquired at the Customs Division of the Treasury Department in Washington to determine whether by law or regulations that method of making entry had been altered. Claimant was advised the entry value might be based upon the market value in the country of origin.
The Emergency Tariff Act of May 27, 1921 (42 Stat. 16), provided in section 301:
That whenever merchandise which is imported into the United States is subject to an ad valorem rate of duty, or a duty based upon or regulated in any way upon the value thereof, duty shall in no case be assessed on a value less than the export value of such merchandise.
Section 303a provided:
That wherever in Title I of this Act, or in the Tariff Act of 1913, as amended, or in any law of the United States in existence at the time of the enactment of this Act relative to the appraisement of imported merchandise (except sections 2874, 2976, and 3016 of the Revised Statutes, and section 801 of the Revenue Act of 1916), reference is made to the value of imported merchandise (irrespective of the particular phraseology used and irrespective of whether or not such phraseology is limited or qualified by words referring to country or port of exportation or principal markets), such reference shall, in respect to all merchandise imported on or after the day this Act takes effect, be construed to refer, except as provided in subdivision (b) to actual market value as defined by the law in existence at the time of the enactment of this Act, or to export value as defined by section 302 of this Act, whichever is higher. Thus, under the 1921 act entry value of imports had to be based upon their export prices and could not be based upon the market value of the goods in the export countries at the time of exportation. However, the penalties applicable when the appraised value of imports exceeded the value declared in the entry, and the provision such penalties could not be remitted or avoided except in cases arising from manifest clerical error, were not affected by the 1921 act.
Merchandise here involved arrived in this country and was entered by claimant between July 8 and August 17, 1921. Entry papers filed with the collector show the invoices bore a shipper's memorandum which when translated reads as follows:
The purchasing power of the mark is still considerably higher in Cermany than any other country; consequently, the selling prices of these commodities in Germany are approximately percent lower than those charged in the invoice. The rates of percentages vary with different invoices, but range from 5242 to 6272 percent.
When entry was made, invoices with shipper's notation as to difference between market value and export value were submitted to the collector of customs at the port of Portland. Claimant's method of calculating the market value of the merchandise was fully stated and explained to the collector. It appears the collector gave claimant no indication his method of calculating the entry value was incorrect. Subsequently appraisers appraised the merchandise at the export value shown on the invoices. Since the appraised value exceeded the entry value, penalties under the 1913 act automatically attached.
Claimant appealed from imposition of the penalties and on appeal the assessment was affirmed. Thereupon claimant filed petition for relief from penalties and on hearing from the Customs Division and the Treasury Department, relief was denied on the ground that under the Tariff Act of 1913 no relief could be granted unless additional duties and penalties were assessed through manifest clerical error, and no such error was involved in this case.
In letter of August 9, 1922, to the collector of customs at Portland, Oreg., the Assistant Secretary of the Treasury says:
The Department is satisfied from all the facts in the case that the importers acted in entire good faith and that the undervaluation resulted rather from a lack of knowledge of the provisions of the emergency tariff act with respect to the basis of appraisement than from any intention to defraud. On the ground that enactment of S. 2171 would accord certain importers special privileges not enjoyed by all under the law, the Acting Secretary of the Treasury in report of May 5, 1939, on the bill states the Department does not recommend its enactment.
In the Tariff Act of September 21, 1922 (42 Stat. 962), Congress has made provision for remittance of penalty duties in cases similar to this. With respect to these duties, section 49 of that act provides:
Such additional duties shall not be construed to be penal and shall not be remitted nor payment thereof in any way avoided, except in the case of a manifest clerical error, upon the order of the Secretary of the Treasury, or in any case upon the finding of the Board of General Appraisers, upon a petition filed and supported by satisfactory evidence under such rules as the board may prescribe, that the entry of the merchandise at a less value than that returned upon final appraisement was without any intention to defraud the revenue of the United States or to conceal or misrepresent the facts of the case or to deceive the appraiser as to the value of the merchandise. In this case the importer cannot proceed under the 1922 act because his penalties were incurred under the act of 1913, which prohibits remittance of penalties except when incurred through manifest clerical error.
The total duty paid by claimant on the shipments was $1,743.05. The duty which should have been paid totaled $3,831.85. Penalties totaled $5,210.36. The Acting Secretary of the Treasury reports the Department does not believe refund in excess of $5,210.36 should be authorized as this is the maximum amount of additional duties the Department's records show was assessed in connection with these importations.
As amended, your committee recommend the passage of the bill.
The following letter from the Acting Secretary of the Treasury is appended hereto and made a part of this report.
Washington, May 5, 1939. Hon. M. M. LOGAN,
Chairman, Committee on Claims, United States Senate. DEAR MR. CHAIRMAN: Reference is made to your letter of April 18, 1939, enclosing three copies of bill S. 2171, for the relief of M. Seller & Co., and requesting a statement of this Department's views on this proposed legislation.
From the record before the Department it appears that the firm of M. Seller & Co. imported certain china from Germany in connection with which additional duties were assessed under the provisions of paragraph I, section III, of the act of October 3, 1913 (38 Stat. 184). The merchandise was covered by seven entries filed at the port of Portland, Oreg., and the entry numbers, the date of entry, and additional duties assessed are as follows: Entry No.:
Additional duty 33 of July 1921.
$102. 75 31 of July 1921.
132. 00 37 of August 1921.
729. 75 35 of August 1921.
222. 75 36 of August 1921.
618. 00 165 of August 1921.
2, 147. 25 166 of August 1921.
1, 257. 86 Total.--
5, 210. 36 The record also discloses that certain of the invoices filed in connection with the entries of this merchandise contained a slip, attached thereto by the shipper, reading as follows:
(Translated). “The purchasing power of the mark is still considerably higher in Germany than in other countries. Consequently the selling prices of these commodities in Germany are approximately percent lower than those charged in the invoice." The percentages stated in the blank in the above quotation varied from 52% to 6272 and, at the time of entry, the importer made various deductions from the invoice values to enter at the values as represented by the memorandum attached to the invoice.
The appraiser approved the entered value of the china covered by entry No. 33 and, in the case of the merchandise covered by the other entries, the appraiser returned the invoice values as correct, disallowing the deductions made by the importers. The collector filed an appeal for reappraisement of the merchandise covered by entry No. 33, and the importers filed appeals for reappraisement of the merchandise covered by the other entries. In the case of all the appeals the single general appraiser found the proper appraised value to be the invoice values without deductions. (Reappraisement Circulars (1922) 31521 and 31837.)
The values thus found by the single general appraiser became final and conclusive and, as these values exceeded the entered values, the importer became liable for the payment of additional duties under the provisions of paragraph I of section III of the act of October 3, 1913, which provides in part as follows:
if the appraised value of any article of imported merchandise subject to an ad valorem duty or to a duty based upon or regulated in any manner by the value thereof shall exceed the value declared in the entry, there shall be levied, collected, and paid, in addition to the duties imposed by law on such merchandise, an additional duty of 1 percent of the total appraised value thereof for each 1 percent that such appraised value exceeds the value declared in the entry
This paragraph further provides that the additional duties assessed shall not be remitted nor payment thereof in any way avoided except in cases arising from a manifest clerical error. As the additional duties incurred did not accrue as the result of a clerical error, the Department was without authority to remit them.
The bill provides for the refund of certain penalties in the amount of $7,147.80." The record before the Department does not reveal the basis for this claim as the additional duties which were incurred as a result of undervaluation total the sum of $5,210.36. So far as the claim for relief from the additional duties covers the additional duties amounting to $5,210.36, the Department does not doubt the good faith of the importer in connection with the transactions which resulted in the assessment of the additional duties. This Department, however, has consistently declined to recommend the passage of legislation for the relief of importers for additional duties incurred for undervaluation, for the reason that such legislation would accord to certain importers special privileges which are not enjoyed by all under the law. The Department, accordingly, does not recommend the enactment of this bill. If this measure is nevertheless to be given favorable consideration by your committee, the Department does not believe that a refund in excess of the sum of $5,210.36 should be authorized, as this is the maximum amount of the additional duties that the records of the Department show was assessed in the case of these importations.
Views substantially the same as those expressed in this letter were incorporated in a letter addressed to your committee on February 28, 1924, and in letters addressed to the Committee on Claims of the House of Representatives on March 29, 1924, February 6, 1926, and April 23, 1928, in response to requests for suggestions and recommendations in connection with similar bills. Very truly yours,
STEPHEN B. GIBBONS, Acting Secretary of the Treasury.