Many persons of high estate both in this country and abroad have been heard to say during the past several years that our customs procedures need to be streamlined; that the antiquated laws of the past should be brought up to date to meet the needs of foreign trade in these times. The customhouse broker knows this only too well, for on him is often dropped the whole job of clearing the shipment through the maze of customs redtape as it now exists. As an unsung hero, the customhouse broker is patiently waiting for better tools with which to be of service to both the Government and the foreign traders.

This association is not concerned with and does not intend to inject itself into the question of whether rates of duty should be higher or lower. Its only interest on that question is that the tariff policy should inure to the best interests of the country. It is deeply concerned, however, with the administrative provisions of the customs laws and is vitally interested in any legislation affecting customs procedures.

I have appeared before the Committee on Ways and Means and before the Committee on Finance of the United States Senate, and made statements on behalf of this association in connection with prior bills offered to simplify the administrative provisions of the Tariff Act. I must in all candor, and I am most happy to do so, state that the present bill is an excellent one. It is far superior to what has been offered heretofore. I believe the Government officials responsible for the present bill should be commended for their intelligent efforts and their practical, satisfactory, and most enlightening approach to the difficult problem involved. They set out to simplify and they did so. It is my opinion that this bill, if enacted into law, will result in a substantial savings to the Government in costs of administration, and that the importing public as well as the nations abroad will genuinely feel that the American customs procedures have finally caught up with the preachments heard everywhere.

I am particularly happy that under section 19 of the proposed bill, the penal duties of section 489 of the Tariff Act are being repealed. I was for a considerable period of time an administrative officer in the Treasury Department as solicitor to the collector of customs at New York. In my opinion, based on experience both as a customs officer and presently as counsel to customhouse brokers and importers, section 489 was both unnecessary and difficult to administer. often whipped the innocent importer and certainly didn't deter the fraudulent one who had to face more drastic sanctions anyhow. I am deeply pleased it is going out if this bill becomes law.

It

The proposal in section 19 which makes the final appraised value the basis for the assessment of duties on imported merchandise subject to ad valorem rates brings back a sense of justice to section 503 of the Tariff Act as now written. The existing law of assessing duties on either the entered value or appraised value, whichever is higher, is in my opinion in many cases totally dishonest. The Government says to the importer, "Heads I win and tails you lose." And, of course, if the new proposal is enacted into law, that will no longer be the state of affairs.

The various proposals which liberalize, by extending the periods of time during which certain procedures must be effected, are most

helpful to the importers and exporters and do not in any way affect the protection or quantum of the customs revenue.

The proposal in section 21 to amend section 520 of the Tariff Act, broadening the authority of the Secretary of the Treasury to give relief to an importer where clerical errors or mistakes of fact have occurred, will go a long way to correct many apparent injustices.

This bill, however, is not perfect and I feel it necessary to call to the attention of this honorable committee two particular sections in which I believe it is defective and should be changed.

In my opinion, the proposal contained in section 17 (d) of the bill which increases to $250, the ceiling for informal entries, is unwise. The present ceiling for informal entries is $100 as provided by section 498 (a) of the Tariff Act. The mischief in this proposal is that it will permit certain importers of certain commodities to carry on their transactions with customs on an informal basis, while their competitors go through formal procedure. We have no objection whatever to lessening the formality on noncommercial shipments, but we definitely oppose lessening the formality on commercial shipments regardless of value. With modern means and speed of transportation, with airplanes bringing cargo daily and sometimes several planes a day arriving from the same foreign country, an importer could do quite a sizable import business with individual shipments in value not greater than $250. With no consular invoice required, and no formal entry filed, and no formal examination or appraisement by the appraiser, that importer's duty payments could and would well depend upon a single inspector and such an importer's shipments could well be different in appraised value and even in classification from those entered formally by his competitors.

Furthermore, at the borders of the United States, where truckmen, who are not even common carriers, are allowed to make entry of goods belonging to other persons under existing customs regulations, there will be quite an opportunity for considerable abuse of the customs process which will be a direct result of increasing the ceiling on informal entries from $100 to $250. Simplification which invites and encourages abuse can only ultimately lead to tighter restrictions and burdensome rules.

Now, I know full well that the reason for raising this ceiling from $100 to $250 is to lessen the burden on the customs force so that more entries can pass through informally than do now. Well, that is fine, up to a point. But it seems to me that where, in the same city, two importers, one who makes his entries formally and has his goods appraised formally and pays his duty in accordance with the best customs minds as to what he should pay, who has to compete with his neighbor who brings in a small shipment, $150 at a time, albeit they might come in daily, and who pays his customs duty, based on the knowledge of a single inspector at the airport or at the post office that that leads to an abuse of competitive business. And you can't have two importers doing the same thing, or the customs service will soon find out that the small saving by having additional informal entries will result in complaint from legitimate importers.

Mr. JENKINS. In that connection, however, that seems to be the principal reason for the increase from $100 to $250, that it will save

expenses.

Mr. ALTSCHULER. I think so. Of course, it will also make it a lot easier for the particular individual who can bring in $150 worth of stuff without going through formal entry. He will be glad to do it. But it is unfair to his competitor.

Now, when you come, of course, to personal shipments: Mrs. Brown buys a set of dishes abroad for $130. No one is interested in making her go through a formal procedure. She ought to have it as informal as possible. But that is not commercial. She is not competing with anybody. But the man on the street who sells his goods should go through the same formal process as his neighbor who also goes through that formal process.

The second point which I would like to make is that the proposal contained in section 19 (a) of the bill, which proposes to repeal an importer's right to amend his entry is also, in my opinion, unwise. It seems to me that information concerning value, which an importer acquires subsequent to the time that he has filed his entry, should be given to the customs service in writing and I can think of no better way to formalize the giving of this information than by an amended entry which is a formal customs document.

In addition, most good businessmen will want to deposit with the collector of customs such moneys as they believe will be payable to the collector as a result of a higher value. Obviously, they cannot just drop this additional payment into the collector's cash register. A tender of this additional payment will have to be accompanied by some written document, and it just seems to me that the payment made at the time the amended entry is filed will cause less work for the Government, than having it done on some other informal basis. And here again, Mr. Chairman, I wish to state that from my conversations with officers in the Treasury Department and otherwise, the chief purpose for abolishing the amendment entry from the Government's point of view is that it will save what they think is unnecessary paper and clerical work.

Now, of course, if that act, as proposed, is made law, there will be a lot less reason to amend entries than exists at the present time. But there still will be some reasons.

I know from experience that an importer does not always have all of the information at the time he makes his entry. It comes in subsequently. And he is obliged, under the law, to make a disclosure of that subsequent information, particularly where that information may have a bearing on the value and how much duty he should pay.

Now, how is he going to give that additional information? Is he going to call the appraiser up on the telephone? Is he just going to send a check down to the collector? Obviously, no. He must put it into some writing, and he must file it in some orderly fashion, where it can become attached to the entry.

Well, if the customs service has to physically manipulate a letter or a document of some kind to handle this additional information and this additional payment, he might just as well handle it through the formality of an amended entry to which the importing public has been accustomed for scores of years.

I think it is a mistake. I do not wish to be a prophet, but I think if they abolish the amendment of entries, before a decade goes by, they will be back in here asking you to reinstate it.

Thank you.

Mr. JENKINS. Let me ask you another question. How do you stand on section 15? There has been some complaint on section 15. What do you think about that?

Mr. ALTSCHULER. I think it is a decided improvement over the present law. I think that for an appraiser to attempt to appraise on the basis of foreign or export value, whichever is higher, as is in the present law, is wrong. Because appraisers do not and cannot easily acquire the information of value in the country of exportation, but they do have the information about the export price to the United States. And I think the most important point in this whole bill is the abolition of foreign value. I think that that is the greatest good to both the Government and the importer.

The others are procedural things. They do away with nuisances and redtape. But the doing away with foreign value is really of vital substantative importance.

Mr. JENKINS. There have been some complaints about section 15, to this effect: that the appraisers have too much authority, and if they are inclined to be a little shady in their deals, they can practice that. But, on the other hand, an inspector anywhere in this service, can be crooked if he wants to be, can he not?

Mr. ALTSCHULER. Well, I would say that the appraiser having a lot of discretion and authority is all right with me, and so long as the importer who thinks he has abused his discretion or authority—he is entitled to go to the courts and find his remedy. And if you preserve the right of judicial rule, it seems to me that giving the customs officers authority and discretion is a good thing.

Mr. JENKINS. He has the right to complain anyhow, at all times. Mr. ALTSCHULER. That is right.

Mr. JENKINS. Any questions?

If not, we thank you very much, Mr. Altschuler.

Mr. ALTSCHULER. Thank you, Mr. Chairman.

Mr. JENKINS. The next on the list of witnesses is Mr. John Ray. Is Mr. Ray here?

(No response.)

Mr. JENKINS. We will pass him then, and if he comes, we will hear him.

The next witness is Mr. Eugene R. Pickrell.

STATEMENT OF EUGENE R. PICKRELL, ATTORNEY,
NEW YORK, N. Y.

Mr. PICKRELL. Mr. Chairman and members of the committee, my name is Eugene R. Pickrell. I am an attorney-at-law, with offices at 10 East 40th Street, New York, N. Y. I specialize in customs, tariff and Federal matters, and have been engaged in such practice for upwards of 20 years. I have been admitted to practice before the courts of record of the State of New York, United States Customs Court, United States Court of Customs and Patent Appeals and several Federal courts. I was formerly chief chemist of the United States Customs Service, port of New York. Since the Tariff Act of 1922 was enacted by Congress, I have handled matters relating to importations of coal tar products before the United States customs officials and before the United States Customs Court and the United States Court of Customs and Patent Appeals.

I appear before this committee in behalf of my clients, Carbic Color and Chemical Co., Inc., and Sandoz Chemical Works, Inc., importers of coal-tar dyes, coal tar-intermediates and coal-tar auxiliaries, with offices located at respectively, 451-453 Washington Street, New York, N. Y., and 61 Van Dam Street, New York, N. Y.

I wish to direct my few remarks to section 19 (a) of H. R. 5106. Section 19 (a) of the bill deletes from section 487 of the Tariff Act of 1930 the following phrase:

or at any time before the invoice or the merchandise has come under the observation of the appraiser for the purpose of appraisement.

Section 487 of the Tariff Act of 1930 permits the amendment of customs entries at any time prior to appraisement. The deletion of the above-mentioned provision in section 487 of the statute eliminates this right to amend customs entries.

Under the provisions of paragraphs 27 and 28 of the Tariff Act of 1930, the ad valorem duties on all coal-tar products are based on either United States value or American selling price, depending on whether or not the imported coal-tar product is competitive with a similar domestic product. If it is competitive, the ad valorem rate of duty is based on the selling price, known as the American selling price in the United States of a comparable domestic product. If it is not competitive, the ad valorem duty is based on United States value which is defined in section 402 (e) of the present statute.

There are only 2 or 3 classes of products other than coal-tar products upon which the ad valorem rates of duty are assessed on the American selling price. The ad valorem duties on all other classes of merchandise are based on either foreign value or export value, whichever is the higher. In the absence of these two bases, then United States value, and in the absence of foreign value, export value and United States value, then on cost of production.

In the determination of whether or not the ad valorem rate of duty on an imported coal-tar product should be based on United States value or American selling price, and if the latter, the amount of same, it is necessary to make comparative tests of such imported coal-tar products with domestic coal-tar products.

The present procedure in making customs entry, amendment of such entry and appraisement of coal-tar products may be illustrated by an importation of a coal-tar dye.

When an importer, such as my clients, receives a consular invoice covering an importation of coal-tar dyes (and such invoice usually covers 6 or more coal-tar dyes) he submits a copy of same, together with a submission sheet, requesting information as to the proper dutiable values, to the United States appraiser at the port of entry prior to making customs entry. On the submission sheet he advises the United States appraiser as to whether or not each of the coal-tar dyes is competitive or noncompetitive; if noncompetitive the United States value and if competitive, the American selling price. The United States appraiser informs him in writing on the submission sheet which of the coal-tar dyes he considers competitive, which noncompetitive, the United States values for the noncompetitive coal-tar dyes and the American selling prices for the coal-tar dyes which are competitive. If the United States appraiser has no definite information on any one of the coal-tar dyes, he advises the importer on the