The Pamphlet Collection of Sir Robert Stout: Volume 56
Pro Forma Invoices
Pro Forma Invoices.
In the volume of documents transmitted to Congress with my Annual Report on "The Collection of Duties," will be found (pp. 65, 591, 675) a reference to the manner in which Sections 9, 10, and 11 of the "Anti-Moiety Law" of June 22d, 1874, have been used to defraud the revenue by the presentation of what have come to be called "pro forma invoices." From the enactment of that law up to October, 1878, an page XXXIII entry by pro forma invoice was treated, as to its liability to penal duty, as an entry made on the original invoice under Section 2900 of the Revised Statutes. During the last named year, an importation of diamonds having been made in the port of New York unaccompanied by a certified invoice, the importer was permitted by the Collector, under the law of 1874, to present "a statement in the form of an invoice." purporting to show the foreign value of the diamonds at 21,550 francs. They were appraised at 27,264.45 francs, and thereupon the additional duty of twenty per cent, was levied by the Collector under Section 2900 of the Revised Statutes. The importers insisted that this section did not apply, inasmuch as the statement, "in the form of an invoice," which accompanied their entry, was not an "original invoice" within the meaning of Section 2900. The question was referred by this Department to the Attorney-General for advice, who, in an opinion dated October 4th, 1878, upheld the contention of the importers. He advised the Department that the law of 1871 initiated a mode of procedure entirely distinct from that described in Section 2900 of the Revised Statutes, inasmuch as the former contains no provision for an addition to the entry. He suggested that if the importer had presented the statement "in the form of an invoice," with intent to defraud the revenue, the importer could be criminally punished and the diamonds forfeited, under the twelfth section of the Act of 1874. As a consequence, the number of pro forma invoices presented at the port of New York, during the year 1884, was nearly 30,000, of which more than 1,700 covered merchandise valued at more than $100. When my attention was called to this condition of affairs I invited the Attorney-General to reconsider the opinion of his predecessor, Mr. Devens, but on August 27th, 1885, the Department of Justice sustained the previous opinion. According to the law, as it stood prior to 1884, only the Head of this Department could authorize an entry without the production of a certified invoice unless the value of the importation might be less than $100, in which ca.se the Collector could admit it to entry without the production of the triplicate invoice and without submitting the question to the Secretary of the Treasury, if the Collector "is satisfied that the neglect to produce such invoice was unintentional, and that the importation was made in good faith, and without any purpose to defraud, or evade, the revenue laws." But the law of 1874 gave to the Collector discretion in the execution of Sections 9, 10, and 11. The facts clearly show that the law of 1874 was inconsiderately and carelessly administered. Such inefficiency at the several ports may now exist, but this Department is unable to sufficiently guard against it. page XXXIV My own opinion, when my attention was first called to the question, was, and it now is, that the twenty per cent, penalty is applicable to an entry made under the sections of the law of 1874 to which I have referred, and for the reason that the last-named law does not repeal the last clause in Section 2900 of the Revised Statutes, which declares that: "The duties shall not, however, be assessed upon an amount less than the invoice or entered entered." That declaration seems to me to be an independent requirement, not depending upon the previous provisions of the section. Originally the law declared, as has been shown, that the duty shall not be assessed upon the amount less than the "invoice" value, but later on the law said that the duty shall not be assessed upon less than the "entered" value. The words "invoice" and "entered," are not in that connection, as it seems to me, used as synonymous words. If they who prepared the Revised Statutes had taken Section 2900 literally from the Statute of 1865, which the Revised Statutes professed to re-enact, the question would have been more free from difficulty, inasmuch as the law of 1865 declares: "The duty shall not be assessed upon an amount less than the invoice or entered value, any Act of Congress to the contrary notwithstanding."
For all these reasons it has happened that the Government has neither collected twenty per cent, penal duty, nor prosecuted the importers or merchandise for fraudulent undervaluation. The evil can, however, be easily remedied by repealing the obnoxious sections in the law of 1874.