CUSTOMS ADMINISTRATIVE LAWS.

REASONS FOR REVISION.

Although the need has many times been pointed out, no revision and codification has ever been made of the laws governing the collection of duties on imports. In 1874 all the statutes then in force were assembled in code form in the Revised Statutes, and in that year and in 1890 some of the administrative laws were revised. But a "plain and uniform statute to regulate this whole matter," urged by Mr. Justice Story as much as three-quarters of a century ago (Alfonso v. United States, 2 Story, 421; 1 Fed. Cas., 395, 396), has not been enacted. Since 1799, when the only complete act was passed, the policy has been to add to the laws from time to time to meet particular requirements rather than to revise and codify them. As a result, some statutes wholly or in part obsolete or superseded have never been expressly repealed; others are redundant, ambiguous, or ill suited to present conditions.

The main purpose of the suggested revision is the codification and simplification of existing laws. But some substantive changes are also made, as hereinafter explained. The draft of the revision and proposed code is divided into 7 chapters, comprising in all 199 sections, which, if enacted as prepared, will take the place of four times that number of provisions scattered through the statute books, and will make a compact, coherent body of law, easy to consult and understand.

CHAPTER I.

DEFINITIONS.

In Chapter I (secs. 1 to 19) terms in common use in customs administration are brought together from various statutes and defined. Two terms, "vessel" and "vehicle," are enlarged to include subsea and aircraft. Others are defined in such manner as to assure uniform usage and to remove doubt. Among them is the term "United States," the proposed definition overcoming difficulties existing since the War with Spain. Some of the insular possessions are regarded as parts of the United States for tariff purposes; others are not. The tariff act of October 3, 1913, excepts the Philippine Islands and the islands of Guam and Tutuila from its operation, and while provision is made in that and in another statute for merchandise coming from and going into the Philippine Islands, the law makes none for shipments to and from Guam and Tutuila. The definition suggested in section 19 of the draft meets this situation by treating the Philippines, Guam, Tutuila, the Virgin Islands, and the Panama Canal Zone as foreign countries in regard to customs administration, except as otherwise directed by law or by the President.

CHAPTER II.

PERSONNEL.

The second chapter of the draft (secs. 20 to 38) contains the proposed law concerning collection districts, officers, and ports of entry. Under the proposed revision collectors, surveyors, naval officers, appraisers, assistant appraisers, and examiners of drugs at Boston, Philadelphia, New Orleans, and San Francisco are withdrawn from presidential appointment. For reasons hereinafter given, it is proposed to abolish the office of surveyor and to change the title of naval officer to deputy auditor. The draft contemplates that all customs officers shall hereafter be appointed by the Secretary of the Treasury. (See sec. 24.)

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SURVEYOR.

In 1913 the office of surveyor at ports of delivery, where surveyors had performed the functions of collectors or of deputy collectors, was abolished under an Executive order discontinuing such ports. At seven ports of entry, where surveyors had previously performed their statutory duties of supervising the lading and unlading of cargo and the determination of quantity, surveyors were retained. The seven ports are Portland (Me.), Boston, New York, Philadelphia, Baltimore, New Orleans, and San Francisco. It is proposed in the draft to discontinue the office at these ports at the expiration of the term for which the surveyors were respectively appointed, unless by transfer to other duties, or for other good reason, the office should be vacated before then. No separate officer would be appointed to perform their duties, which would devolve upon the collector or his deputies. (See secs. 23, 24, and 28.)

APPRAISER.

Only two substantive changes are proposed with respect to appraisers. One of the changes is appointment by the Secretary of the Treasury instead of by the President, and the other is enlargement of the appraiser's duties by transferring from collectors to them the function of determining what charges in the invoices of imported merchandise constitute elements of dutiable value. (See secs. 102 to 104.)

NAVAL OFFICER-DEPUTY AUDITOR.

The title "naval officer" is an illustration of obsolete survival. It should be changed because a misnomer. It was bestowed more than two centuries ago by the English Government upon an officer appointed by each colonial governor to enforce the navigation laws and to secure the perquisites derived by the king and governor from forfeitures. "Deputy auditor" (the term proposed) is more appropriate, since the duties are now essentially those of an accountant, and the accounts are finally settled by auditors of the Treasury Department. (See sec. 30.)

COLLECTOR.

One of the most important proposed changes affecting the organization of the personnel of the service is that by which the appointment of collectors (as well as appraisers and deputy auditors) is to be made by the Secretary of the Treasury. Under existing law such a provision would operate automatically to bring all collectors within the civil-service provisions. (See secs. 20 to 31.) At the same time it is proposed that the term of office for collectors shall be extended from four to six years. It is not believed that the appointment of collectors for an indefinite term would conduce to the best eficiency; on the other hand, it is submitted that their future term should be longer than the four years now provided by law. A system such as is here proposed for new appointees-executive appointment under civil-service rules and on terms of reasonable length-would enable capable subordinate officials in the Customs Service to rise more readily to positions of responsibility and would also facilitate the transfer of collectors who have shown ability at smaller ports to others of larger consequence. The commission concurs in the view urged upon it that modifications of this sort would give a stimulus to efficiency in the service and would further both retention and promotion of capable officers and employees.

BROKERS' LICENSES.

A change is proposed in the manner in which the revocation of a broker's license shall affect the continuance of his business. By existing law a broker's license may be revoked or suspended by the Secretary of the Treasury, but a petition by him for a judicial review of the Secretary's decision operates as a stay and enables

him to continue business until the judicial review has been terminated. Jurisdiction in such cases is now vested in the United States district court, which acquired jurisdiction when the circuit courts were abolished by the act of March 3, 1911, chapter 231 (Judicial Code, sec. 289 et seq.). Under the proposed revision any customs broker whose license is revoked or suspended by the Secretary of the Treasury will still have his right of appeal, but it will be to the Court of Customs Appeals, a special appellate tribunal in customs matters. The Court of Customs Appeals is not only the proper reviewing body, but is less likely to be burdened by other business and therefore less delayed in reaching a prompt decision than the district court. In order to prevent frivolous appeals to that court and consequent delay in reaching a judicial decision, there is a provision requiring the assent of one or more judges of the Court of Customs Appeals as a condition precedent to a stay of the revocation or suspension of the license. (See secs. 36 to 38.)

CHAPTER III.

REPORT AND ENTRY OF VESSELS AND VEHICLES.

The third chapter of the draft (secs. 39 to 74) is devoted to the report, entry, and unlading of importing vessels, and the lading and clearance of exporting vessels, and analogous treatment of importations and exportations in railroad cars and other conveyances. No radical change of substance is proposed in the laws as now construed and enforced; the statutes, which are in large part obsolete, overlapping, or conflicting, have been rewritten and the law made more concise and clearer.

CHAPTER IV.

ASCERTAINMENT AND COLLECTION OF DUTIES.

Certified invoices are discontinued for importations exempt from duty. At present there is a charge of $2.50 for consular certification required both for free and for dutiable merchandise. The consequence of the present requirement is that free goods, and occasionally goods subject to specific duties, are undervalued, or are divided into small lots valued each at $100 or less, in order to evade the payment of the fee for consular certification. No useful object is attained by requiring certification in the case of free goods, and this would be especially true under the American valuation system. Certified invoices and information connected therewith, for dutiable merchandise exceeding $100 in value, are retained because necessary in the administration of the law, whether or not resort be had to foreign prices or costs.

Certified invoices must fully describe the merchandise and specify all elements of cost or value; in other words, contain a more explicit statement than heretofore of all material facts, in order that the invoice may serve its true function of giving customs officers detailed information about the merchandise. (See secs. 78 to 80.)

BONDS.

Some bonds are proposed to be dropped and others to be combined. Among those dropped is the bond required upon every entry of merchandise for warehouse. This bond is particularly burdensome, and is entirely unnecessary, since the Government retains possession of the merchandise until duties are paid.

Bonds proposed to be combined are for various requirements incident to entry, such as the production of invoices and declarations and the return to customs custody of unexamined packages delivered to the importer. Under a practice of long standing an importer is permitted to give a general bond covering a period of six months for the redelivery of such packages, in lieu of a special bond upon each importation.

It is proposed to extend this period to one year and to include in the condition of the bond all requirements for which separate bonds are now taken at the time of entry. (See sec. 89.)

One of the obligations made a part of the condition of this general bond, and of the separate bond, if given, for the production of a certified invoice when none is received by either the collector or the importer and when entry is made upon a pro forma invoice (see sec. 75) is for the payment of any increased or additional duties found due upon final liquidation. This was formerly a statutory requirement, and its restoration is intended to secure to the Government revenue accruing upon imported merchandise which might be lost if recourse should be had only to the importer or the consignee.

A bond not now authorized by law is added to the draft. It is for a bill of lading when unproduced at the time of entry. The importer will thereby be enabled to enter his goods without delay and yet with no financial risk to the collector. (See secs. 84 and 85.)

UNCLAIMED MERCHANDISE.

The limit of time for entry before the collector shall take possession of an importation as unclaimed is fixed in the draft as 48 hours, exclusive of Sunday and holidays, unless a longer time shall be granted by the collector. In ordinary cases this will induce prompt entry and prevent congestion of imported merchandise on the piers or docks. In emergencies the collector may grant an extension of time, and so defer if not obviate the treatment of merchandise as unclaimed. (See sec. 85.)

PASSENGERS' BAGGAGE.

A somewhat longer time is proposed to be given persons arriving from abroad for the declaration of dutiable articles, by permitting their disclosure at any time before examination of the baggage shall be begun. The penalty for neglect is made the value instead of treble the value of the particular article or articles. (See secs. 97 to 100.)

EXAMINATION PACKAGES.

No minimum number of packages to be designated for examination is prescribed in the draft. Under the existing law at least 10 per cent of every importation, except at New York, must be withheld from delivery to the importer pending the determination of market value. In many cases a less number, or representative samples, will suffice. (See sec. 102.)

BASIS OF DUTIABLE VALUE.

Section 11 contains provisions basing ad valorem duties on American instead of foreign values. Section 84 requires appraising officers to use reasonable ways and means in determining values. Section 87 requires duties ad valorem to be taken on American values.

Under the American valuation system provided in this draft duties ad valorem would be taken on comparable and competitive American products in every case where there were such products. Manufacturers' selling prices would be given precedence over jobbers' and middlemen's prices. This provision would obviate difficulties due to differences in values.

Use of both the singular and plural terms "place" or "places" of production and "principal market" or "markets" would show the intention to have appraising officers appraise the imports upon the value at the principal place or in principal market, as the case may be, in instances where such value may be ascertained.

Duties would be taken upon the value for sale in the United States in all cases not covered by the first part of section 11. In cases where there were no comparable and competitive American products sold in wholesale quantities at the factory or in the

open market appraising officers would not be bound by inflexible statutory requirements. The selling price of prior importations and other aids to appraisement would be available and could be invoked with less controversy and dissatisfaction than would be possible under any law naming the sources of value to be considered, prescribing the order in which they should be resorted to, and undertaking in express terms to declare what should be done in the several cases in regard to the inclusion or the exclusion of duties, profits, and expenses.

Appraising officers would always be required to keep before them the legislative intention that duties shall be taken on fair market value, and importers would have opportunity to resort to the courts if reasonable ways and means were not used in appraisement. Furthermore, the omission from the law of all the provisions, except the first sentence, of Paragraph I of Section III of the tariff act of 1913 would relieve the importer from penalties for entering goods at a value less than the appraised value without fraud. This harmonizes with the system of entry by appraisement, which is in effect proposed in Committee Print No. 1 (confidential), Customs Administrative Act, section 18.

REAPPRAISEMENT.

A considerable change in procedure is proposed when appeals are made from a single general appraiser to the Board of General Appraisers. At present, reappraisement, if called for, is made by a single general appraiser, and appeals from his decision may then be made to the Board of General Appraisers (acting through three assigned members of that board). This general procedure is retained; but it is proposed that the appeal to the board shall be upon the record made before the single general appraiser. Under existing law there is virtually a new trial in such cases, since there is unlimited opportunity for the introduction of new evidence before the board. This permits the withholding of evidence at the hearing before the single general appraiser and thereby makes his decision rest upon a part only of the facts. Under the proposed change all evidence must be introduced in the first instance before the single genera appraiser and the appeal decided upon the record made before him. The change will expedite and simplify procedure without prejudicing the interests of either the importer or the Government. A retrial can be had whenever the ends of justice so require. (See secs. 105 and 126.)

It is further proposed to give the Government an opportunity of securing judicial review of questions of law affecting the validity of reappraisements. This right the importer now has through making a protest against the collector's decision. There is no reason why the Government should be barred from the same opportunity, and occasion frequently arises for review at the Government's instance. (See sec. 105.)

EXTENSION OF JURISDICTION.

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Reference has already been made to the proposed review by the Court of Custom Appeals of decisions of the Secretary of the Treasury revoking or suspending brokers" licenses. A further extension in the draft gives the Board of General Appraisers and, upon appeal, the Court of Customs Appeals jurisdiction of issues upon the value of foreign currency and allowance of drawback, now vested in the Secretary of the Treasury; also of cases where collectors exclude merchandise from entry or delivery as prohibited importations or otherwise. A regular hearing, as in cases now arising upon protest, is deemed advisable instead of leaving these matters to exclusive determination by the Secretary of the Treasury. (See secs. 123 and 124.)

REMEDY FOR INSUFFICIENT DUTY.

Under existing law the right of protest is confined to cases where the importer considers the rate or amount of duty too high. This restriction it is proposed to remove under the revision. The change will restore the right, which had existed