Mr. LERCH. But I submit that that is what we want to accomplish by this proposed amendment that I offer because a technical legal objection to his testifying to those facts within his own knowledge would keep out his testimony. It is our purpose to have him testify. On page 17, line 3: This section proposes a review and an appraisal by the Customs Court, but there is no procedure provided for. You cannot take an appeal under existing law from a decision of the court back to the same court for another appraisal. Section 501 only provides for an appeal to reappraisement from the finding of the appraiser, either by the collector or by the importer. Hence, how would he ever get this back into court? I suggest at the end of line 3 the words "for appeals from the decision of the appraiser" be inserted. That would supply all the necessary routine. As to section 516 (b)

Mr. BUCK. Before you leave this section, you seem to be under the impression that the language suggested in this bill leaves the marking permissive instead of mandatory. Is that your belief? Mr. LERCH. Yes, I do.

Mr. Buck. The present statute reads:

Every article imported into the United States, and so forth, shall be marked, and so forth, in accordance with such regulations as the Secretary of the Treasury may prescribe.

Mr. LERCH. That is right.

Mr. Buck. And the proposed language reads:

Under such regulations as the Secretary of the Treasury may prescribe, every article of foreign origin * * * imported into the United States shall be

marked.

You think that the mere reversal of those clauses makes that permissive instead of mandatory?

Mr. LERCH. I think that would be the construction of the court. The present language "Under such regulations as the Secretary may prescribe" has been judicially construed any number of times, even by the Supreme Court, to mean the ordinary official duties to be performed to accomplish the mandatory provision of the statute.

Now, we have changed the venue, so to speak, and we have put it, "Under such regulations as the Secretary of the Treasury may prescribe" this shall be done. Certainly, if Congress changes the language of the statute, the courts will construe some purpose in that change.

Mr. Buck. If the language were reversed, you would be satisfied with the other changes in that section?

Mr. LERCH. Except as I called attention to in the amendments that I proposed.

Mr. BUCK. You mean about the "conspicuous" place and so forth; I understand that.

Mr. LERCH. Yes. In other words, if it were put back into the existing language, we would be satisfied with that.

Mr. Buck. You believe the fact that the law now says they shall be marked in accordance with the regulations makes it more mandatory than the language "Under such regulations as the Secretary may prescribe the articles shall be marked" and so forth?

Mr. LERCH. There is no doubt in my mind about that.

Now, as to section 516, this same provision was in a bill 2 years ago, passed the House and was taken out by the Senate. We propose

that the present section 516 be left as it is, or improved. When 516 was adopted, it was intended to give to the American manufacturer a remedy. That remedy has been so circumscribed by technical decisions of the courts that today it is almost worthless.

This proposed amendment is virtually a repeal, from a practical standpoint, of section 516. We have heard testimony here as to harassing the importers and suspension of liquidations.

In every reappraisement case that is tried in the customs court, a period of anywhere from a year-I am now conducting litigation that has lasted, in reappraisement, since 1926, and it is not yet finally decided. But there an importer brings the suit and he is not harassed because he is going to get something back if he wins it. And it has not curtailed his business to continue this litigation for all these years.

But as I listened to the testimony of Mr. Bevans, he said this does not let an importer know how his business can be conducted for all this long period. My comment is that it all depends on whose ox is gored.

When he files a protest, the same time elapses, the same indecision as to how much duty is to be paid or how much profit he is to get exists. It is no different here. Our suggestion is that this section should make the remedy effective and simpler than it now is rather than virtually abolishing the remedy.

Mr. REED. Have you any language to suggest that will do that? Mr. LERCH. Yes; I shall be very glad to submit language. I do not have it here, but I shall submit an amendment.

The last section I would like to comment on orally is on page 40, line 21, subsection (d). That provision virtually repeals the law of 1927 which established the Customs Bureau. We did not hear anything about that from Government counsel, but it is my judgment that that language, by merely substituting for the words "officers of the Bureau of Customs", the words "officers or employees of the Treasury Department", repeals the statute which established the Customs Bureau.

In the report of this committee on that bill of 1927 it said on the first page:

The defects of the present system are believed to be many and among the more important may be mentioned the fact that under the existing organization the Secretary of the Treasury is required to pass upon a multitude of details, involving a highly specialized and intricate branch of the law in the course of its administration in the collection of customs duties. The bill will enable the Secretary to impose this duty upon the Commissioner of Customs while retaining general supervision and control over all Customs officials.

That was recognized as the purpose of establishing the Customs Bureau. Since its establishment, it has been collecting there some of the best minds in Customs. It has functioned efficiently and we do not believe that this language, which prevents the Secretary referring to the officers of the Bureau any more of its jurisdiction, but sends it back to where it was before the law was passed, virtually repeals it. And we do not believe that should be done.

That concludes my presentation, Mr. Chairman.

The CHAIRMAN. We thank you for your appearance and the testimony you have given the committee.

(Mr. Lerch submitted the following brief:)

BRIEF OF THE AMERICAN TARIFF LEAGUE

*COMMITTEE ON WAYS AND MEANS,

House of Representatives, Washington, D. C.

GENTLEMEN: In accordance with permission granted at the hearing, and supplementing the testimony given, we beg to submit the following memorandum of suggested changes in the bill H. R. 6738.

SECTION 3

Section 304, the marking provision of the present law, we feel, is sufficient in its terms to provide for the effective administration of the marking requirements and needs no change. The discretionary provision of the present law has been widely exercised by the Secretary of the Treasury since 1930 to the extent that your committee has heard complaints against its retention. The proposed amendment, we feel, would make all marking contingent upon the Secretary's discretion. We, therefore, suggest that the wording of the present law be retained and the proposed change rejected. However, if it is the will of the committee that some changes be made, we direct your attention to the following specific recommendations:

The language appearing in lines 6 and 7 on page 2 of the proposed bill reverses the order of the present bill which contains a mandatory provision of the marking of articles "under such regulations as the Secretary of the Treasury may prescribe."

For many years provisions like the existing law have been construed by the Court and it has been held that the authority given to the Secretary is that authority which may be needed to effectively administer the provisions of the law. The transposition of this language to the beginning of the section we feel removes the mandatory character of the provision and places within the discretion of the Secretary all that is contained in the following provision. Well-recognized principles of statutory construction demand that the reviewing court give this meaning to the proposed change since it is presumed that Congress does not perform a futile act, and any change in language will be given a meaning if such may be had.

In the same provision on page 2, line 10, insert after the word "permanently" the words "in a conspicuous place."

This language has been judicially construed, is in the present statute, and has caused no embarrassment to the Department or to the importer, and we feel that it should be retained.

On page 2, at line 12, delete the "the", the next to the last word in the line, and substitute therefor the word "in". At the beginning of line 13, before the word "name", insert the words "words the", so as to read: "in the United States in English words the name of the country of origin

* *

The reason for the suggested change is that the provision in the Tariff Act of 1930 now reads the same as our proposed language, and we can see no reason for changing this language, which has received judicial construction, for language which is ambiguous. "English name of the country" does not necessarily mean, in the light of previous decisions, the name expressed in English words, since there are names which may be expressed differently in the United Kingdom than in the United States. This is clearly shown by the number of Treasury Department rulings where spelling, although acknowledged in foreign countries, is not recognized in the United States and is held insufficient for our marking requirements.

On page 3, lines 3 and 4, "(A) Such article is incapable of being marked;" insert after the word "marked," "provided that no article shall be held incapable of being marked if an article of the same class or kind is marked in any manner by manufacturers in the United States."

Experience has shown that a number of imported articles have been held to be incapable of being marked where their competitors in this market marked their products with trade names "Made in the U. S. A." and similar markings. Certain lines of glassware come within this category, the importers having contended that they were incapable of marking where their domestic competitors used a system of acid etching to identify their merchandise. On page 3, delete lines 14, 15, and 16.

This provision gives to the Secretary the right to exempt from marking articles used by the importer and not intended for sale. This would include

containers such as bottles which were imported to be filled by the importer and not intended for sale, thus removing the protection afforded by this section against domestic-made merchandise in foreign containers without notice to the

consumer.

On page 3, under the same marking section, at line 17, we propose at the beginning of subdivision G, before the word "such", to insert the words "Upon proper proof and under bond if", so as to read: “(G) Upon proper proof and under bond if such article is to be processed * * *""

The reason for this change is that the classification of merchandise, the subject of this subdivision, is dependent upon use after importation. It has been the practice in customs legislation for a great many years that where a rate or amount of duty is contingent upon an act to be performed after importation, it is to be done either while the merchandise is in bond or while it is covered by a term bond after release from customs custody. We feel that the exaction of a bond in this instance would occasion no inconvenience, would be of great protection to the revenue, and would be in line with previous legislation.

Under the same heading, subdivision J, page 4, line 7, contains the words "class or kind", and again at lines 11 and 12, the same page, "in substantial quantities."

We feel that these two provisions are so uncertain that it renders this section open to the broadest interpretation with a possible defeat of the intent of the law. If, therefore, subdivision J is to be enacted into law, these two provisions should be deleted. However, it is our opinion that subdivision J is undesirable and has no place in the law since its only purport is to perpetuate rulings of the Department simply because they have existed for a certain period and were not reviewed by the proper tribunals. We therefore recommend that the whole of subdivision J be deleted.

On page 4, subdivision (b), "Marking of containers", at line 22, delete the last word in the line, "the", and substitute therefor the word "in"; and in line 23, after the word "English", insert the words "words the."

This is to effect the same change as was suggested on page 2, lines 12 and 13. Under the same marking provisions, subdivision (c), page 5, lines 4 and 5, delete the last two words in line 4, and the first seven words in line 5, so that the provision will read: "and if such article is not exported or destroyed in accordance with the requirements of this section

* * *""

Aagain under the same subparagraph, on line 7, of page 5, delete the third and fourth words, "or marking", and on the same line, before the word "destruction", add the word "or"; and again at line 21, page 5, delete the second and third words "or marking"; and on line 20, before the word "destruction", add the word "or.'

The reason for this change is that the present language would seem to provide for the marking of merchandise which had been delivered from customs custody into the importer's place of business to be marked there without the payment of the additional duty provided for in lines 11 and 12 on page 5. This would seem to offer an incentive to the importer to bring in merchandise not marked with the country of origin, to take his chance of being caught by the Government, and if he is caught, mark the merchandise, offer proof to the Government, and escape payment of the additional duty on the merchandise so delivered, with the maximum effect that he would pay the 10 percent provided by the law only on those packages which were certified to public stores for examination. This is a departure from customs legislation as we know it, since no privilege has been extended to the importer after his merchandise leaves customs custody. In fact, with every entry is filed a redelivery bond to assure the Government proper duties or in lieu thereof liquidated damages to the value of the merchandise. By the terms of this proposed statute a greater privilege is given to the importer on merchandise which the Government has never inspected over that which is actually examined.

SECTION 5

On page 8, line 22, a proposed change of section 315 of the Tariff Act of 1930, delete the word "higher", the last word in line 22, and substitute therefor the word "different."

We recognize that this section is legislation to legalize that which has been the practice of the Department for a number of years, namely, where there has existed a uniform practice, sanctioned by the customs authorities for a number of years, before a change of rate or classification is made by the Department,

the Department will allow before placing the same in effect 30 days' notice after publication of such change. While we recognize the existence of this practice, it has been carried on, we may say, as a matter of executive leniency, but there has been no sanction of law. If it is to be made a part of our statute law, we can see no reason for a more favorable attitude toward the importer than toward the domestic interest. The reason offered for this period of leniency toward the importer is that the importer may have ordered from abroad merchandise against sales made in the United States, and a hardship would result if the rate of duty were increased before the merchandise was received. The same argument will apply to the domestic interests with equal or greater effect. The domestic interest has met the competition of the importer on the basis of a known rate. He also has taken orders and met sales on the basis of his known competition. If, therefore, the duty to be paid by the importer is to be decreased, equal opportunity should be extended to the domestic interests to fill their orders before they meet the ruinous competition at the lower price.

SECTION 14

On page 16, line 15, the proposed change to section 501 of the Tariff Act of 1930, the reappraisement section, delete the words "kept by them" and insert in lieu thereof the words "in the custody of such officials or made under their supervision, or as to conclusions reached by them in the course of their official duties".

The purpose of this change is to render effective the obvious purpose of this amendment to section 501. Few examiners have facts of their own knowledge as to the lines of merchandise they handle inasmuch as prior to their employment in Government service they have never engaged in the industry manufacturing or selling the lines they cover. Experience has also shown that the pressure of business at the larger ports in the United States make it impossible for examiners to keep competent records of individual shipments. However, examiners serving the Government for a long term of years gain knowledge even greater than that attained by some of those engaged in the industry. This is not within the realm of "facts within their knowledge" as may be legally interpreted. The examiners also have accurate and valuable opinions as to the lines of merchandise they cover. These opinions would not legally fall within the definition of the statute as "facts." In a reappraisement where a sample of the merchandise is not available for the inspection of expert witnesses, to assist the Government, the Government should have the advantage of all possible reliable evidence. We feel that only by the suggested change can this be effected.

Again on page 16, in line 24, after the word “protest”, insert the words “or reappraisement".

Under the existing law, an appraisement may be declared void or invalid on either reappraisement or protest proceedings, and we feel that it does not matter what type of proceeding invalidates the appraisement, the Government should still have the right to proceed under the proposed amendment.

Under the same provision, on page 17, line 3, at the end of the provision, before the period and after the word "section", insert "for appeals from a decision of the appraiser."

The provision as it now stands is meaningless from the standpoint of procedure since no appeal under existing law is provided from the judgment of the court leading to another appraisement or reappraisement where one is declared void as provided for in this section. Insertion of this clause would provide procedure whereby one might start the action contemplated by this amendment. In other words, section 501 now provides the manner in which an appeal may be taken from a decision of the appraiser. The proposed amendment contemplates this identical action where the court declares the appraisement void or invalid. By the addition of this clause it will be possible for the importer or the collector to appeal in the same manner and prosecute the appeal in the same manner as he does under the existing law his appeal from the original decision of the appraiser.

SECTION 15

On page 17, line 4, purporting to be a redraft of section 516 (b) of the Tariff Act of 1930, commonly known as American manufacturers' protest section, we recommend that line 4 and everything that follows on pages 17, 18, 19, and 20, down to and include line 23 be deleted.