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The Pamphlet Collection of Sir Robert Stout: Volume 56
Appendix A. — Circular
Appendix A.
Circular.
1883.
Department No. 93. Secretary's Office. Treasury Department, Washington, D. C., July 7, 1883.To Collectors of Customs and Others:
"If upon the appraisal of imported goods, wares, and merchandise, it shall appear that the true and actual market value and wholesale price thereof, as provided by law, cannot be ascertained to the satisfaction of the appraiser, whether because such goods, wares, and merchandise be consigned for sale by the manufacturer abroad to his agent in the United States, or for any other reason, it shall then be lawful to appraise the same by ascertaining the cost or value of the materials composing such merchandise, at the time and place of manufacture, together with the expense of manufacturing, preparing, and putting up such merchandise for shipment, and in no case shall the value of such goods, wares, and merchandise be appraised at less than the total cost or value thus ascertained."
"shall, at or before the shipment of the merchandise, be produced to the consul, vice-consul, or commercial agent of the United States nearest the place of shipment, for the use of the United States, and shall have indorsed thereon, when so produced, a declaration signed by the purchaser, manufacturer, owner, or agent, setting forth that the invoice is in all respects true: that it contains, if the merchandise mentioned therein is subject to ad valorem duty, and was obtained by purchase, a true and full statement of the time when and the place where the Same was purchased, and the actual cost thereof, and of all charges thereon; and that no discounts, bounties, or drawbacks are contained in the invoice but such as have actually been allowed thereon; and when obtained in any other manner than by purchase, the actual market value thereof at the time and place when and where the same was procured or manufactured."
"no merchandise subject to ad valorem duty belonging to a person not residing at the time in the United States, who has not acquired the same in the ordinary mode of bargain and sale, or belonging to the manufacturer, in whole or in part, of the same, shall be admitted to entry, unless the invoice thereof is verified by the oath of the owner, or of one of the owners, administered and authenticated in the mode prescribed in the two preceding sections, and certifying that the invoice contains a true and faithful account of the merchandise, at its fair market value, at the time and place when and where the same was procured or manufactured."
"It shall be the duty of the appraisers of the United States, and every of them, and every person who shall act as such appraiser, or of the collector and naval officer, as the case may be, by all reasonable ways and means in his or their power, to ascertain, estimate, and appraise the true and actual market value and wholesale price, any invoice or affidavit thereto to the contrary notwithstanding, of the merchandise, at the time of exportation, and in the principal markets of the country whence the same has been imported into the United States, and the number of such yards, parcels, or quantities, and such actual market value or wholesale price of every of them, as the ease may require."
Neither of these provisions is repealed, but they all remain in full force.
The Department regards Section 9 of the Act of March 3, 1883, as in nowise changing or modifying the requirements of the Revised Statutes as to the duty of manufacturers, owners, or agents in making their declarations to invoices, under Section 2854, Revised Statutes, or as to the verification by the oath of the owner, under Section 2845. Both sections require a statement that the invoice contains a true and faithful account of the merchandise, at its fair market value, at the time and place when and where the same was procured or manufactured.
"I,____ ____, do solemnly and truly swear (or affirm) that the entry now delivered by me to the collector of ____ contains a just and true account of goods, wares, and merchandise imported by or eon-me signed to me in the____, whereof ____is master, from____; that the said goods, wares, and merchandise were not actually bought by me, or by my agent, in the ordinary mode of bargain and sale, but that, nevertheless, the invoice which 1 now produce contains a just and faithful valuation of the same, at their fair market value, at the time or times and place or places when and where procured for my account (or for account of myself or partners); that the said invoice contains also a just and faithful account of all the cost for finishing said goods, wares, and merchandise to their present condition, and no other discount, drawback or bounty but such as has been actually allowed on the said goods, wares, and merchandise; that the said invoice and the declaration thereon are in all respects true, and were made by the person by whom the same purports to have been made; that I do not know nor believe in the existence of any invoice or bill of lading other than those now produced by me, and that they are in the state in which I actually received them. And I do further solemnly and truly swear page XLIX
(or affirm) that I have not in the said entry or invoice concealed or suppressed anything whereby the United States may be defrauded of any part of the duty lawfully due on the said goods, wares, and merchandise, and that if at any time hereafter I discover any error in the said invoice, or in the account now produced of the said goods, wares, and merchandise, or receive any other invoice of the same, I will immediately make the same known to the collector of this district."
By reference to decisions of the courts it appears that the provisions of section 1) of the act of 1883 are a recognition of a principle already applied to the method which appraisers may adopt in extraordinary cases to ascertain what is the market value.
"The market value of goods is the price at which the owner of the goods or the producer holds them for sale; the price at which they are freely offered in the market to all the world; such prices as dealers in the goods are willing to receive, and purchasers are made to pay when the goods are bought and sold in the ordinary course of trade. You will perceive, therefore, that the actual cost of the goods is not the standard. On the contrary, that having been the standard, the law has been changed, and for the standard of the cost has been substituted another standard, to wit, the actual market value."
"The law presumes that there was, at the time and place of the manufacture of the goods seized, an actual market value thereof; and no evidence can be received or considered, under the law and under the Oaths to the invoices, to show there was not, in fact, such actual market value thereof. The cost of the goods will come under consideration, if at all, not as a substitute for market value, but merely as an item of evidence on the question as to what was the actual market value. Therefore, you must assume in this case that there was an actual market value for these goods at the time and place of their manufacture, the only question being to ascertain what such actual market value was. The claimants had no right to adopt any other standard of value than such actual market value, nor do I understand them as claiming that they had such right. They have sworn in the oath on each invoice that such invoice contains the actual market value; and their claim is, not that they had a right to set forth anything except the actual market value, but that the actual market value was the cost, with the manu-facturer's profit added, at the percentage named in the testimony, and that such actual market value was no greater according to their idea of actual market value. So, also, the claimants were required to state in their invoices the actual market value of their goods at the time and place of their manufacture, not only without regard to the cost thereof, but without regard to the profit or loss which might result from their consignment thereof, or any loss which maybe shown in the end to have resulted therefrom. If they chose to take the cost and add a profit, and make up the actual market value in that way, and it turns out in the end that that is the actual market value, very well; but if it turns out in the end that that is leas than the actual market value, the claim- page L
ants cannot maintain under the law that they had a right to put in place of the actual market value the cost with the manufacturer's profit added. Nor is the manufacturer relieved or excused from stating in his invoice such actual market value, or justified in adopting any other standard of value, because he may not himself make sales at home of similar goods, but may consign all such goods for sale to foreign markets. Although he may adopt such course of trade, he is, nevertheless, required to state in his invoice the actual market value of such goods at the time and place of their completed manufacture: that is, the price he holds such goods for sale at such time and place, the price at which he then and there freely offers them in the market, such price as he is then and there willing to receive for them, if they are sold in the ordinary course of trade."
"Where no sales are made in the country of production, either for consumption or export, the market value 6f similar goods of other man-ufacturers actually sold should be ascertained and betaken into account. In cases where the manufacturer ships all his goods to the United States on consignment for sale, and the market value cannot be ascertained by the methods before indicated, it should be fixed by reference to the market value of the component materials of the goods at the time and place of manufacture, with the expense of manufacture and a fair manufacturer's profit added; and the appraised value in such cases cannot be less than the cost and profit so ascertained.
"It is to be understood that evidence of the cost of production of imported goods is in all cases to be regarded as a proper subject for consideration in determining dutiable values, and appraisers are allowed, under the law, the greatest latitude in procuring information as to what is the true market value of imported merchandise; but it will be borne in mind that duties can in no case be assessed upon an amount less than the invoice or entered value, nor can the appraisement be made at less than that value."
The Department holds that all the old methods of ascertaining the actual market value are still open to the appraiser, and that it is still his duty, by every means in his power, to "ascertain, estimate, and appraise the true and actual market value and wholesale price" of merchandise, "any invoice or affidavit thereto to the contrary notwithstanding," and that the provisions of Section 9 only authorize him, when such value cannot be ascertained to his satisfaction otherwise, to appraise the same by ascertaining the cost or value of the materials as prescribed in that section.
The language of the provision is not imperative, it is merely permissive—"it shall then be lawful to appraise the same by ascertaining the cost or value of the materials," &c. No manufacturer, shipper, owner, or other party has the right to invoice goods procured otherwise than by purchase at any other than the true market value, and in no case is the appraiser required to adopt any but the ordinary method of ascertaining market value.
When he does adopt this method of appraisal, the law expressly requires that "in no case shall the value of such goods, wares, and merchandise be appraised at less than the total cost or value thus ascertained."
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Although by section 7 of the tariff act of 1883 all the provisions of law for adding charges to the value of merchandise to make dutiable value are repealed, yet section 9 of the same act provides that when appraisers resort to the method of appraisal described in that section, they are required to add to the cost or value of the maierials composing such merchandise at the time and place of manufacture "the expense of manufacturing, preparing, and putting up such merchandise for shipment." The expense of preparing and putting up merchandise for shipment has always been regarded as among the charges, and the Department holds that, notwithstanding the general repeal of all provisions for charges contained in section 7, the charges for preparing and putting up merchandise for shipment must still be added to make dutiable value whenever the Appraiser makes his appraisal under section 9.
It may further be observed that the method of appraisal contained in Section 9 might, if adopted in some cases, inflict great hardship upon exporters of merchandise. It has sometimes happened that the market value of merchandise, notably silks, by reason of an over-supply, has been less than the actual cost of production. To appraise such merchandise at the cost or value of the material composing it at the time and place of manufacture, with the expense of manufacturing, preparing, and putting up such merchandise for shipment, might fix its value far above the actual market value and wholesale price at the date of exportation, while in another condition of the market the actual market value and wholesale price might be greater than the cost of production with the expense of preparing and putting up the merchandise for shipment.
Appraising officers and parties interested in the importation of merchandise will therefore bear in mind that not only does the law require the true and actual market value of the merchandise to be certified upon the invoice and stated in the entry, but that this is a far more just and equitable method of appraisal than that described in Section 9. and that the method adopted in Section 9 should not be resorted to except in cases where the true and actual market value and wholesale price cannot otherwise be ascertained to the satisfaction of the appraiser. a condition which can but rarely occur.
When the appraiser is compelled to resort to this mode of appraisal, there is nothing in the statute to prevent his adding to the items therein enumerated whatever he deems proper to make the true and actual market value, the only restriction upon his action being that "in no ease shall the value of such goods, wares, and merchandise be appraised at less than the total cost or value thus ascertained."
H. F. French.
Acting Secretary.