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"The effect of the changes worked in respect to section 3258 consists of nothing more than a substitution of another officer for registration in lieu of the collector of the district as originally designated by statute. The change so worked is binding on the public and fulfills the requirement of law. * If the appellants had in their possession and custody a still set-up and had not registered it with the officer designated, they committed a violation of the law."
This was a case involving a criminal statute, which would be construed most strictly. The court said that liability did not vanish simply because the official with respect to whom the statute gave a function had been replaced by an official to whom the function was delegated under a reorganization.
On the other hand, the question presented to us here involves statutes providing rights, remedial statutes which would be construed most liberally. The plan contains not a single word to indicate any intent to abolish the system of judicial review set up in detail by the Congress, and in fact the Presdent specifically states the contrary in his transmittal message. In this situation it is difficult to find any basis for concern that a conclusion might be reached contrary to that in the Czarnecki case.
The answer to the concern expressed is clear. In short, any fear that Reorganization Plan No. 3 of 1952 could be used to deprive the United States Customs Court of jurisdiction or jeopardize the system of judicial review set up by the Congress is wholly without foundation,
THOMAS J. LYNCH, General Counsel. (Representative communications addressed to the committee bearing on the subject matter of Albert MacC. Barnes' testimony follow :)
NATIONAL COUNCIL OF AMERICAN IMPORTERS, INC.,
New York 3, N. Y., May 28, 1952. Hon. John L. MCCLELLAN, Chairman, Committee on Government Operations, United States Senate, Senate Office Building,
Washington, D. C. MY DEAR SENATOR MCCLELLAN: Reference is made to Reorganization Plan No. 3 of 1952, pertaining to the Bureau of Customs which was transmitted to the Congress by the President on April 10, 1952.
Section 1 of this reorganization plan proposes to abolish all offices in the Bureau of Customs of the Treasury Department, of collector of customs, comptroller of customs, surveyor of customs, and appraiser of merchandise, to which appointments are required to be made by the President, by and with the advice and consent of the Senate.
The National Council of American Importers, as the representative national organization of United States importers, is not particularly concerned as to whether these officials should be specially appointed by the President or required to be civil-service employees. Our organization is, however, deeply concerned over the proposal to abolish the position of the collector of customs because under the Tariff Act of 1930, as amended, the word “collector” is defined in section 104 (h) to mean collector of customs and includes assistant collector of customs, deputy collector of customs, and any person authorized by law or by regulation of the Secretary of the Treasury to perform the duties of a collector of customs. The tariff act further sets forth specific duties to be performed by the collector in connection with the importation of merchandise including the requirement in section 501 of the act to give a written notice of appraisement to importers under certain conditions.'
We respectfully submit that Reorganization Plan No. 3 of 1952 should be clarified with respect to the abolition of the position of collectors of customs, as we consider it vitai that such office, whether filled by civil-service employees or political appointments, be preserved. Respectfully yours,
NATIONAL COUNCIL OF AMERICAN IMPORTERS, INC., By HARRY S. RADCLIFFE, Executive Vice President.
BROOKS & BROOKS,
New York, May 28, 1952, COMMITTEE ON GOVERNMENT OPERATIONS,
United States Senate, Washington, D. C. GENTLEMEN : Reorganization Plan No. 3 of 1952 provides for reorganization of the Bureau of Customs of the Treasury Department and abolishment of the offices of the collectors of customs and appraisers of merchandise.
Section 501, Tariff Act of 1930, provides for notice of appraisement to be given to importers of merchandise by customs officials and grants the right of appeal to the United States customs court from the action of the appraisers; section 514 gives the importer the right of protest against collector's decisions, which protests are forwarded to the United States customs court.
This system of judicial review has been perfected by various statutes from 1890 to the present date.
If the offices of collector and appraiser are abolished, it would make it possible for the Secretary of the Treasury or anyone designated by him to, in effect, deny the right of judicial review by changing the method or place of making such notices public to some headquarters port instead of the place of original entry of each importation or by other means.
The President's letter of transmittal of this plan to the Congress disavows any such intention, but we submit that there should be a positive declaration in the plan before it becomes effective that nothing in the plan shall be so construed as to take away the right of judicial review of decisions of the collector, the appraiser, and other customs officials granted by the provisions of the Tariff Act of 1930 and other statutes of the United States relating thereto. Respectfully,
BROOKS & BROOKS.
NEW YORK, N. Y., May 28, 1952. Hon. John L. MCCLELLAN, Committee on Government Operations,
Senate Office Building, Washington, D. C. Although we endorse Reorganization Plan 3, we urge your approval clearly specify understanding that existing rights of importers and others to review administrative decisions in customs courts and the means of obtaining such review will continue unimpaired. Unlimited discretion given Secretary Treasury under plan creates uncertainty for future as to continuation of such review by customs courts.
JOSEPH A. SINCLAIR, Secretary, Commerce and Industry Association of New York, Inc.
STATEMENT OF ALFRED F. BEITER, NATIONAL PRESIDENT,
NATIONAL CUSTOMS SERVICE ASSOCIATION, NEW YORK, N. Y.
RORGANIZATION Plan No. 3 OF 1952 The CHAIRMAN. Our next witness is Mr. Alfred F. Beiter. Will you come forward, Mr. Beiter, please.
I take it Mr. Maher is not here?
The CHAIRMAN. Which plan do you wish to address your remarks
The CHAIRMAN. If you wish to submit it for the record, it will be printed in full. I will ask you to expedite your testimony as much as you can.
Mr. BEITER. Mr. Chairman and members of the committee, I am Alfred F. Beiter, president of the National Customs Service Associ, ation, an organization composed of employees and officers of the United States customs service.
As you may know, customs is a career service. All of its employees with the exception of 52 top-level officers, are under civil service and nearly all of our members have 20 and more years of service.
We have given very careful study to Secretary Graham's clear exposition of the Department's views on Reorganization Plan No. 3 relating to the customs service, and just last week, subsequent to the publishing of our special news letter and Mr. Graham's testimony, we sat in, at the invitation of the Bureau of Customs, at a conference in which we were given a rather full and frank discussion of what is intended to be done under this plan.
I might add here that both Mr. Reynolds and Mr. Loeffler have been very helpful to me. Both of these gentlemen have a broad knowledge of the subject and were willing at all times to give freely of their valuable time. The committee is fortunate, indeed, in having the services of two such well-qualified and able men.
The CHAIRMAN. Thank you. The committee has appreciated their services. We think they are very competent.
Mr. BEITER. All of the foregoing has contributed greatly to our understanding of the plan, but it has not lessened our conviction that its approval would be harmful to the customs service.
One of our major concerns about this plan was our belief, based on informal legal opinion, that in the course of abolishing the various offices held by political appointees it destroyed the system set up in the Tariff Act whereby the determination, assessment, and collection of customs duties, is carried on by three interacting, coordinated, but independent offices—that is, collector, comptroller, and appraiser,
Since we feel very strongly that this system, and the checks and balances it provides, are one of the principal protections the customs service possesses against laxity, fraud, and corruption, we are anxious that this separation and independence be continued in the organizational structure of the customs service. Consequently, we urged our members to solicit congressional rejection of this plan for this and other reasons.
In a disturbing sort of way, the conference had with the Customs Bureau has relieved us of our fears in this connection, for the time being. The Bureau tells us that authority given the Secretary under plan 26 of 1950 is sufficient to scrap this system regardless of the fate of plan 3. It seems therefore that this particular horse fled the barn 2 years ago, and there isn't anything that can be done about it at this time. The Bureau has assured us, however, that there is no intention of using such authority to abandon this system. Present officials cannot bind their successors, and we can only hope that, as time goes on, successive Secretaries of the Treasury continue to exercise the same restraint.
The elimination of Presidential appointees from the various toplevel offices is, in our opinion, a political question and its effect on the over-all functioning of the customs service would not be of exceeding significance either way. ii fr. • Section 3 of this plan eliminates vital duties of the Comptroller of Customs. In our opinion, these duties are so fundamental to a properly organized customs service that their continuance should be guaranteed by statute, that under no circumstances should administrative discretion be submitted for these tariff requirements. We are speaking now particularly of the requirement that comptrollersverify all assessments of duties and allowances of drawback made by collectors in connection with liquidation thereofsection 523 of the Tariff Act, and the obligation of masters of vessels from foreign ports to send a copy of each such vessel's manifest to the comptroller for the district, section 439 of the Tariff Act.
A ship's manifest must contain among other information a detailed account of all merchandise on board, the descriptive marks and numbers of each package of the same, be it case, package, bale, barrel, or other, and the names of the individual consignees of each piece or lot of merchandise in conformity with the bills of lading issued. This is a copy of the manifest which has been deposited with the collector at the port of entry and against which the merchandise unloaded from the vessel is checked as part of the procedure governing entrance and clearance of merchandise.
The comptroller now completely checks the collector's report on the manifest of each such vessel to make certain that all incoming cargo is accounted for. The desirability of such a check is apparent. The direct receipt by the comptroller of a copy of the vessel's manifest, listing all the cargo brought into the country, makes positive independent assurance that all merchandise brought into the country is in fact entered at the customhouse, that connivance to bypass customs entry and examination has small hope of success.
The department plans to substitute for this a type of spot check by traveling field auditors on the original manifests in the collector's offices. A fair-sized vessel, carrying general merchandise, will have thousands of tons of cargo, broken down into hundreds of lots varying from a small package to a hundred or more cases or barrels. This on a single fairly representative ship’s manifest. Multiply this by thousands of vessels and other carriers that arrive at United States ports in the course of the year, and there is a staggering total of these manifests.
Secretary Graham, in his statement, put the number of formal entrees made in 1951 at 900,000. This, then, would be about the number of separate consignments of cargo contained in the many thousands of individual manifests to be spot-checked by field auditors. The mere statement of the numbers of transactions involved suggests the inadequacy of the spot check for this type of work.
The protection needed here is not against error; lost cargo is rare and eventually turns up in most cases. The present system guards against diverted cargo and reducing it to a spot check is an invitation to smuggling and venality. Weakness invites attack.
It may be that there is a case for cutting down on the comptroller's audit of the collectors' accounts, and so forth. Error or fraud are more likely to follow a pattern in disposition and disbursement of moneys and expendables. And these are more susceptible to control by a commercial type of internal check. This type of transaction is not peculiar to customs and does not differ materially from Government work in other agencies. Even here there is a real question whether it can be handled more effectively and economically than
under the present system where all the comptroller's functions for the United States and its possessions, including 100 percent verification and complete manifest control, are handled by slightly more than 200 employees at an annual cost of approximately $1,200,000.
Spot check is not suitable, however, for the comptroller verification of the collectors' duty assessments and refunds. This is not, as has been suggested, merely a duplication of the collector's work. It is a primary verification of the complex conclusion which the collector's liquidator makes when he makes the duty assessment on merchandise. A consideration of what is involved in the decision of the collector's liquidator, which is now completely checked by the comptroller, will be valuable in appreciating the necessity for the comptroller's check. The liquidator has before him the shipper's invoice, the entry papersincluding the bill of lading and any affidavits or other documents that the nature of the particular importation may require—the appraiser's description of the merchandise, and report of its value and condition, the inspector's tally of over-all quantity or weights and perhaps a chemical analysis.
Initially, he must satisfy himself that the various papers before him are sufficient for his purposes and seek supplementary information when they are not. Then he determines the quantity of the merchandise to be assessed and ascertains the dutiable value thereof, after having reconciled any discrepancies among the shipping papers and the miscellany of official reports before him. Then from the maze of overlapping provisions and fine distinctions which characterize the enormously complicated present-day tariff, he selects the one category and rate of duty which is applicable to the merchandise and computes the duty down to the penny.
This process applies for each commodity in the shipment and many invoices cover numerous commodities. The complexity of this process and the consequent need for a complete check of the assessments, and so forth, it produces is demonstrated by the fact that the errors found by comptrollers, though minute percentagewise, still produce revenue differences running into six or seven figures annually. This takes no account of the value of a detected error as a means of correcting an erroneous practice. In this respect errors found have a value quite unrelated to whether the revenue difference in the particular verification is large or small. In this sense no error is too small to ignore.
Savings under this plan are put at $300,000 annually. Since half of this is attributable to the elimination of political appointees which could be effected by the President without this plan if he so desires, the real money-saving value of the plan is $150,000. For this we are to inject an element of weakness in a system which collects $800,000,000 in revenue yearly and has been free of major scandal. One or two cases of contraband slipped in as diverted cargo could make this the most expensive short-cut in customs history.
We think that a greater degree of accuracy and a higher level of integrity should be demanded of Government operations for the very reason that they are Government operations. The conduct of public business has greater significance and importance than corresponding activity of a commercial nature and the greatest care should be taken that the affairs of Government agencies, particularly an enforcement and revenue agency like the Customs, be identified in the public mind