CUSTOMS ADMINISTRATIVE ACT OF 1937 MONDAY, MAY 24, 1937 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10:30 a. m., Hon. Robert L. Doughton (chairman) presiding. The CHAIRMAN. We will continue hearing Mr. Hester's statement in reference to H. R. 6738, a bill to amend certain administrative provisions of the tariff act of 1930, and for other purposes. Mr. Hester, you may proceed with your statement. STATEMENTS OF CLINTON M. HESTER, ASSISTANT GENERAL COUNSEL; WILLIAM R. JOHNSON, CHIEF COUNSEL, BUREAU OF CUSTOMS; AND STEPHEN J. SPINGARN, OFFICE OF GENERAL COUNSEL, TREASURY DEPARTMENT-Resumed Mr. HESTER. Mr. Chairman, the next section is section 12, on page 14 of the bill. At the present time, when merchandise has been imported into the United States but has not been entered within 1 year after its importation, it is regarded as abandoned, and the Government sells it at public sale. After deducting the amount of customs duties and charges, the balance is passed on to the consignee of the goods. Hereafter, under this provision, if it should be enacted into law, the merchandise would be considered abandoned at the end of 1 year, but the claimant might come in before the sale, and pay the customs duties and charges, and receive the merchandise. The amendment will expressly authorize an existing practice. There is one other matter that is cleared up here, and that is the rate of duty that shall be applicable to the abandoned merchandise. The question is determined under this bill in accordance with the present practice, that the rate of duty shall be the rate in effect at the time the merchandise is abandoned to the United States. Mr. CROWTHER. Are such operations as this very extensive? Do they occur very often in the Government? Mr. HESTER. Mr. Johnson says no. I should not think the occasion would arise very often where a man would import merchandise and not claim it; but there are such cases from time to time. Mr. CROWTHER. In the meantime it is in a bonded warehouse, is it not? Mr. HESTER. A public warehouse. The next section is section 13, which appears on page 14 of the bill. In the 1922 Tariff Act there was a provision, section 456, which authorized the immediate release from customs custody of the portions of shipments not required for examination. In the 1930 act this special provision was repealed. The purpose of this proposed amendment is to reinstate that special provision of the act of 1922, and thus provide expressly for requiring a bond to assure compliance with all laws and regulations applicable to the goods released before examination of the retained packages. The next amendment is section 14 on page 15 of the bill. The purpose of the amendment is in the interest of efficient administration. At the present time the law provides that when merchandise is imported into the United States not less than 10 percent of the merchandise must be examined. If you bring in a hundred packages you are permitted to take out 90 right away. The CHAIRMAN. They can examine more, if you so elect, can they not? Mr. HESTER. Yes: but at least 10 percent must go to the appraiser's stores. The appraiser can call for more if he sees fit to do so. But the law now provides that a less number may be examined if the Secretary issues a special regulation to that effect. The courts have held that when the Secretary issues a special regulation, it must apply to the particular type of merchandise at every port of entry in the United States. The result is this, taking a simple case by way of illustration: Let us say that tomatoes, for example, are being imported into New York. They may come in every few days and the appraisers are thus very familiar with the values of tomatoes of various grades. It is not necessary to protect the revenue that we examine 10 percent of a shipment every time it comes into New York, so we think a smaller quantity is sufficient, say 2 percent. So the collector makes a recommendation to the Secretary that he issue a special regulation to permit that only 2 percent be examined at New York, but not less than 1 case from each invoice. The customs courts have held that these special regulations must apply at every port in the United States where similar tomatoes are being imported. In San Francisco, perhaps, a shipment of such tomatoes may come in rarely, and the appraisers there are not familiar with that type of tomato, so it is necessary there to examine 10 percent or more, whereas in New York they are so familiar with the tomatoes that it will protect the revenue if they examine merely 2 percent. Mr. KNUTSON. Do you have various grades of the tomatoes? Mr. HESTER. I was just taking that as an example. We could take something else. Mr. KNUTSON. Could you not use a little better illustration than tomatoes? If tomatoes are not applicable, why use them? Mr. HESTER. I thought it was a very simple example. Suppose we take a hundred cases of shoes, all of the same grade. The purpose of this amendment is that, when the Secretary issues a special order for New York, it will apply at New York only and will not apply to San Francisco. In San Francisco 10 percent would still be the minimum quantity for examination. Mr. KNUTSON. Has the law, as it now stands, slowed up inspection materially as a result of the requirement of 10 percent? Mr. HESTER. That is right. Whereas you might only have one shipment of certain goods in San Francisco in a year, you may have the same kind of goods coming into New York daily. But under the court's construction there would be no escape from the proposition that if we issued an order for 2 percent in New York it would have to be 2 percent in San Francisco. Mr. KNUTSON. I think that provision was put in the law at the request of the Customs Bureau. Mr. HESTER. That is probably true, but experience has shown that a change in the law would be in the interest of efficient administration. It is a court decision that makes the change necessary. Section 14 also provides that no appraisement shall be held invalid because less than the statutory quantity of merchandise was examined unless the party by such invalidity can show that an incorrect appraisement resulted from the failure to examine additional goods. Section 14 provides further that when the appraisement of an importation is held to be invalid, the United States Customs Court must find the proper dutiable value of the goods. Mr. DINGELL. May we not now revert at this point to the discussion of two previous sections, section 3, and the section pertaining to overtime? Mr. HESTER. That is section 8. Mr. DINGELL. Sections 8 and 9? Mr. HESTER. We have covered section 9. Section 8 is on page 10 of the bill. At the present time the Treasury Department has regular shifts on duty on nights, Sundays, and holidays at some ports of entry in the United States. At ports of entry where we do not have regular shifts on Sundays, holidays, and nights the law authorizes the owner or operator of vessels or vehicles to requisition the services of customs employees for the purpose of supervising the unlading and lading of merchandise, baggage, and passengers, for the entering and clearance of vessels and vehicles, and for the issuing and recording of ship's documents, such as bills of sale. Mr. DINGELL. With or without pay? Mr. HESTER. To be paid by the carrier. It also frequently happens that exporters and importers desire the services of customs employees at these ports outside regular office hours for the purpose of segregating merchandise or manipulating merchandise. It also happens outside regular hours that merchandise leaves the country or comes into the country otherwise than by a vessel, or by, a vehicle, such as by driving cattle across the border. The purpose of this amendment is to broaden the law, to permit exporters and importers and persons who bring merchandise into the United States otherwise than by a vessel or vehicle to requisition the services of customs employees. Mr. DINGELL. Do you mean by that, that would apply to employees on ferryboats or international bridges, or at international tunnels? Mr. HESTER. It means where they do not have regular shifts of duty at the present time, persons will be able to requisition the services of customs employees and pay them overtime for those services. Mr. DINGELL. Would that apply as well to our customs employees who are called upon for that particular service in international tunnels, or at international bridges, or on international ferries? Mr. HESTER. It would depend entirely upon whether or not we have regular shifts on duty there. Where we have a regular shift, that service is available to the public. Mr. DINGELL. You mean by regular shift, that there may be two or three shifts of 8 hours so we have men on duty all the time, and then this will not apply because it is official! Mr. HESTER. That is right. Mr. McCORMACK. You refer to the Detroit situation, do you not? Mr. HESTER. That is so in Detroit. Mr. McCORMACK. Under the present law if a vessel comes into Boston, or any other port, on Sunday or on a holiday, or at night, or during the working hours on Saturday afternoon Mr. JOHNSON. We usually maintain regular services on Saturday afternoon. Mr. McCORMACK. So, on Sundays and holidays where the overtime law applies, the owner or master can requisition certain customs employees, and the owner or master can pay the overtime pay? Mr. JOHNSON. Yes, sir. Mr. McCORMACK. At the rate of time and a half for overtime. Does this law aim to eliminate that provision? Mr. JOHNSON. No, sir. Mr. McCORMACK. Is it aimed to broaden that? Mr. JOHNSON. Yes, sir. Mr. McCORMACK. In what respect? Mr. JOHNSON. There are certain situations at the present time where customs facilities are furnished outside of regular hours of business under circumstances in which the employees must work without any extra compensation. This will remedy that situation by providing that the person for whose benefit the services are performed must stand the cost at the rate provided in the Overtime Act. Mr. McCORMACK. Under the Overtime Act, the overtime is payable only to certain classes of employees, is it? Mr. JOHNSON. The Overtime Act applies to all classes of customs officers who work overtime, but not to all cases in which services may be furnished. Mr. McCORMACK. What does an admeasurer do? Does he measure the tonnage of a vessel ? Mr. JOHNSON. Yes, sir. Mr. McCORMACK. Does he get overtime when he works? Mr. JOHNSON. I believe not. Mr. McCORMACK. I think you will find that he does not. In other words, are there any employees who work overtime who do not receive overtime pay? Mr. JOHNSON. Yes, sir. Mr. McCORMACK. There are? |