certified invoice shall be applicable alike to merchandise entered in connection with a seller's or shipper's invoice or a statement in the form of an invoice. "(d) Furniture described in paragraph 1811 of section 201 of this Act shall enter the United States at ports which shall be designated by the Secretary of the Treasury for this purpose. If any article described in said paragraph 1811 and imported for sale is rejected as unauthentic in respect to the antiquity claimed as a basis for free entry, there shall be imposed, collected, and paid on such article, unless exported under customs supervision, a duty of 25 per centum of the value of such article in addition to any other duty imposed by law upon such article."

(c) Section 501 of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, Supp. II, title 19, sec. 1561), is further amended by changing the period at the end of the first sentence to a comma and by inserting thereafter "or (3) in any case, if the consignee, his agent, or his attorney requests such notice in writing before appraisement, setting forth a substantial reason or reasons for requesting the notice.", and by deleting the third sentence of the section.

(d) Section 503 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1503) is amended by deleting "the entered value or" and ", whichever is higher" from subsection (a), by deleting subsection (b), and by redesignating subsection (c) as subsection (b).

(e) The Act of July 12, 1932 (ch. 473, 47 Stat. 657; U. S. C., 1946 edition, title 19, sec. 1503a), is repealed.

(f) Section 562 of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1562), is further amended by changing the third sentence to read as follows: "The basis for the assessment of duties on such merchandise so withdrawn for consumption shall be the adjusted final appraised value, and if the rate of duty is based upon or regulated in any manner by the value of the merchandise, such rate shall be based upon or regulated by such adjusted final appraised value."

COMMINGLED MERCHANDISE

SEC. 18. Section 508 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1508) is amended to read as follows:

"SEC. 508. COMMINGLING OF GOODS.

"(a) Whenever dutiable merchandise and merchandise which is free of duty or merchandise subject to different rates of duty are so packed together or mingled that the quantity or value of each class of such merchandise cannot be readily ascertained by the customs officers (without physical segregation of the shipment or the contents of any entire package thereof), by one or more of the following means: (1) Examination of a representative sample, (2) occasional verification of packing lists or other documents filed at the time of entry, or (3) evidence showing performance of commercial settlement tests generally accepted in the trade and filed in such time and manner as may be prescribed by regulations of the Secretary of the Treasury, and if the consignee or his agent shall not segregate the merchandise pursuant to subsection (b), then the whole of such merchandise shall be subject to the highest rate of duty applicable to any part thereof.

"(b) Every segregation of merchandise made pursuant to this section shall be accomplished by the consignee or his agent at the risk and expense of the consignee within twenty days after the date of personal delivery or mailing by the collector of written notice to the consignee that the merchandise is commingled. Every such segregation shall be accomplished under customs supervision, and the compensation and expenses of the supervising customs officers shall be reimbursed to the Government by the consignee under such regulations as the Secretary of the Treasury may prescribe.

"(c) The foregoing provisions of this section shall not apply with respect to any part of a shipment if the consignee or his agent shall furnish to the collector, in such time and manner as may be prescribed by regulations of the Secretary of the Treasury, satisfactory proof (1) that such part (A) is commercially negligible, (B) is not capable of segregation without excessive cost, and (C) will not be segregated prior to its use in a manufacturing process or otherwise, and (2) that the commingling was not intended to avoid the payment of lawful duties or any part thereof. Any merchandise with respect to which such proof is furnished shall be considered for all customs purposes as a part of the merchandise, subject to the next lower rate of duty (including a free rate), with which it is commingled."

CORRECTION OF ERRORS AND MISTAKES

SEC. 19. Section 520 (c) (1) of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1520 (c) (1)), is further amended to read as follows:

"(1) A clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law, adverse to the importer and manifest from the record or established by documentary evidence, in any entry, liquidation, appraisement, or other customs transaction, when the error, mistake, or inadvertence is brought to the attention of the customs service within one year after the date of entry, appraisement, or transaction, or within sixty days after liquidation or exaction when the liquidation or exaction is made more than ten months after the date of the entry, appraisement, or transaction; or"

CONVERSION OF CURRENCY

SEC. 20. (a) Section 25 of the Act of August 27, 1894, as amended and reenacted (U. S. C., 1946 edition, title 31, sec. 372 (a)), is repealed, and section 522. of the Tariff Act of 1930 (U. S. C., 1946 edition, title 31, sec. 372) is amended to read as follows:

"SEC. 522. CONVERSION OF CURRENCY.

"(a) The Secretary of the Treasury shall keep current a published list of the par values, expressed in United States dollars, of the several foreign currencies maintained pursuant to the Articles of Agreement of the International Monetary Fund, or pursuant to any other international agreement to which the United States is a party. For the purposes of all provisions of the customs laws, whenever it is necessary to convert into an amount expressed in currency of the United States any amount expressed in a foreign currency for which such a par value was maintained for the date as of which the value or cost requiring conversion is to be determined, such conversion, except as specified in subsection (d), shall be made at such par value.

"(b) If no such par value was so maintained for such date, the conversion shall be made at the buying rate for the foreign currency in the New York market at noon on the date as of which the value or cost requiring conversion is to be determined, or, if banks are generally closed on such date in New York City, then the buying rate at noon on the last preceding business day. For the purposes of this subsection, such buying rate shall be the buying rate for cable transfers payable in the foreign currency in which the amount to be converted is expressed, and shall be determined by the Federal Reserve Bank of New York and certified to the Secretary of the Treasury, who shall make it public at such times and to such extent as he shall deem necessary. In ascertaining such buying rate, such Federal Reserve bank may in its discretion (1) take into consideration the last ascertainable transactions and quotations, whether direct or through exchange of other currencies, and (2) if there is no market buying rate for such cable transfers, calculate such rate from actual transactions and quotations in demand or time bills of exchange or from the last ascertainable transactions and quotations outside the United States in or for exchange payable in United States currency or other currency.

"(c) If, pursuant to subsection (b), the Federal Reserve Bank of New York certifies more than one rate of exchange for a particular foreign currency for any date the conversion for customs purposes of amounts expressed in that currency for that date shall be made by applying the applicable rate or rates so certified which reflect effectively the value of that foreign currency in commercial transactions.

"(d) When, apart from normal variation between buying and selling rates, there are one or more rates of exchange in addition to the par value for any foreign currency listed pursuant to subsection (a), the list shall so indicate. When rules governing the conversion of such foreign currencies have been formulated pursuant to an international agreement to which the United States is a party, the Secretary of the Treasury shall issue regulations in conformity with such rules, and the conversion for customs purposes of amounts expressed in such currencies into amounts expressed in currency of the United States shall thereafter be in accordance with such regulations so long as they are in effect. If no regulations are in effect and applicable to the conversion of such a currency, one or more rates of exchange in addition to the par value may be certified 98600-52-2

in the manner set forth in subsection (b) and the par value and any certified rates shall be applied in the manner prescribed in subsection (c).”

(b) Section 481 (a) of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1481 (a)) is amended by deleting subparagraph (7) and by renumbering subparagraphs (8), (9), and (10) as (7), (8), and (9).

CUSTOMS SUPERVISION

SEC. 21. The Tariff Act of 1930, as amended, is further amended by adding following section 645 (U. S. C., 1946 edition, title 19, sec. 1645 a new section 646 reading as follows:

"SEC. 646. CUSTOMS SUPERVISION.

"Wherever in this Act any action or thing is required to be done or maintained under the supervision of customs officers, such supervision may be direct and continuous or by occasional verification as may be required by regulations of the Secretary of the Treasury, or, in the absence of such regulations for a particular case, as the principal customs officer concerned shall direct."

CONVERSION OF PROCESSING TAXES TO IMPORT TAXES

SEC. 22. (a) As soon as each proper rate can be determined by the United States Tariff Commission, that Commission shall certify to the President the respective rate or rates of import tax for copra, palm nuts, and palm-nut kernels which the Commission estimates to be reasonably equivalent in respect of each commodity to the relevant tax imposed on the date of the enactment of this Act under section 2470 of the Internal Revenue Code (U. S. C., 1946 edition, title 26, sec. 2470) on the first domestic processing of coconut oil and palm-kernel oil, respectively. The certified rates shall be proclaimed by the President, and on and after the thirtieth day after the date all the certified rates have been so proclaimed the amendments of law specified hereafter in this section shall be effective, with the proclaimed rates inserted in the redesignated and amended section 2491 (e) of the Internal Revenue Code in the respective blank spaces following the descriptions of the products for which the rate shall have been proclaimed.

(b) Section 2470 (b) of the Internal Revenue Code (U. S. C., 1946 edition, title 26, sec. 2470 (b)) is amended by changing the period at the end thereof to a comma and adding "or (3) with respect to any commodity, or product of a commodity, upon which an import tax has been paid under chapter 22."

(c) (1) Section 2491 (c), (d), (e), (f) of the Internal Revenue Code (U. S. C., 1946 edition, title 26, sec. 2491 (c) (d), (e), (f)) are amended to read as follows:

"(c) (1) Coconut oil, palm oil, and palm-kernel oil, fatty acids derived from any of the foregoing oils, and salts of any of the foregoing (whether or not such oils, fatty acids, or salts have been refined, sulphonated, sulphated, hydrogenated, or otherwise processed), 3 cents per pound.

"(2) There shall be imposed (in addition to the tax prescribed in paragraph (1)) on coconut oil a tax of 2 cents per pound, except that the additional tax imposed by this paragraph shall not apply when it is established, in accordance with regulations prescribed by the Secretary of the Treasury, that the imported product (A) is wholly the production of the Philippine R public or of any possession of the United States, or (B) was produced wholly from materials the growth or production of the Philippine Republic or of any possession of the United States. The additional tax imposed by this paragraph shall not apply after July 3, 1974.

"(3) Whenever the President, after consultation with the President of the Philippine Republic, finds that adequate supplies of neither copra nor coconut oil, the product of the Philippine Republic, are readily available for processing in the United States, he shall so proclaim, and after the date of such proclamation the provisions of paragraph (2) of this subsection and of pargraph (2) of subsection (e) shall be suspended until the expiration of thirty days after he proclaims that, after consultation with the President of the Philippine Republic, he has found that such adequate supplies are so readily available.

"(d) Any commodity, not provided for heretofore in this section, 10 per centum or more of the quantity by weight of which consists of, or is derived directly or indirectly from, one or more of the products specified above in this section, a tax at the rate or rates per pound equal to that proportion of the rate or rates prescribed in this section in respect of such product or products which the

quantity by weight of the imported commodity, consisting of or derived from such product or products, bears to the total weight of the imported commodity; but there shall not be taxable under this subsection any commodity (other than an oil, fat, or grease, and other than products resulting from processing seeds without full commercial extraction of the oil content), by reason of the presence therein of an oil, fat, or grease which is a natural component of such commodity and has never had a separate existence as an oil, fat, or grease;

"(e) (1) Hempseed, 1.24 cents per pound; perilla seed, 1.38 cents per pound; kapok seed, 2 cents per pound; rapeseed, 2 cents per pound; sesame seed, 1.18 cents per pound; and copra, per pound; palm nuts, per pound; and palmnut kernels, per pound;

"(2) There shall be imposed (in addition to the tax prescribed in paragraph (1)) on copra a tax of per pound, except that the additional tax imposed by this paragraph shall not apply when it is established, in accordance with regulations prescribed by the Secretary of the Treasury, that the imported product (A) is wholly the production of the Philippine Republic or of any possession of the United States, or (B) was produced wholly from materials the growth or production of the Philippine Republic or of any possession of the United States. "The additional tax imposed by this paragraph shall not apply after July 3, 1974. "(f) The tax imposed under subsection (b) shall not apply to rapeseed oil imported to be used in the manufacture of rubber substitutes or lubricating oil, and the tax imposed under subsection (c) (1) shall not apply to palm oil imported to be used in the manufacture of iron or steel products, tin plate, or terneplate. The Secretary of the Treasury shall prescribe methods and regulations to carry out this subsection."

(2) Section 2491 of the Internal Revenue Code (U. S. C., 1946 edition, title 26, sec. 2491) is further amended by adding a new subsection (h) reading as follows:

"(h) No drawback in respect of any tax imposed by this section shall be allowed under any provision of law on the exportation of any byproduct resulting from the production of coconut oil or palm-kernel oil in the United States."

(d) Section 2493 of the Internal Revenue Code (U. S. C., 1916 edition, title 26, sec. 2493) is amended by changing the period at the end thereof to a semicolon and adding new paragraphs to read as follows:

"(4) for the purposes of the Philippine Trade Act of 1946 (U. S. C., 1946 edition, title 22, sec. 1251-1360), the term 'ordinary customs duty' shall not include any tax prescribed in section 2491 (c) or (d), or in section 2491 (e) with respect to copra, palm nuts, or palm-nut kernels, and the term 'internal tax' shall include such taxes;

"(5) the taxes imposed on oils and derivative products under section 2491 (c) and on copra, palm nuts, and palm-nut kernels under section 2491 (e) shall not be subject to modification under section 350 of the Tariff Act of 1930, as amended (U. S. C., 1946 edition, title 19, sec. 1351).”

(e) Section 2492 of the Internal Revenue Code (U. S. C., 1946 edition, title 26, sec. 2492) is amended by deleting the date "August 21, 1936," and by inserting in place thereof the words "the date of the proclamation provided for in section 22 (a) of the Customs Simplification Act of 1951,".

SAVING CLAUSE

SEC. 23. Except as may be otherwise provided for in this Act, the repeal of existing law or modifications thereof embraced in this Act shall not affect any act done, or any right accruing or accrued, or any suit or proceeding had or commenced in any civil or criminal case prior to such repeal or modification, but all liabilities under such laws shall continue, except as otherwise specifically provided in this Act, and may be enforced in the same manner as if such repeal or modification had not been made.

RELATING TO GENERAL AGREEMENT ON TARIFFS AND TRADE

SEC. 24. The enactment of this Act shall not be construed to determine or indicate the approval or disapproval by the Congress of the Executive Agreement known as the General Agreement on Tariffs and Trade.

Passed the House of Representatives October 15, 1951.

Attest:

RALPH R. ROBERTS, Clerk.

Senator HOEY. The chairman of the committee is necessarily absent on business in Georgia, and has requested that I preside in his absence. Our first witness this morning is Mr. John S. Graham, Assistant. Secretary of the Treasury.

Mr. Graham, we will be very glad to have you make any statement you like in connection with this matter.

STATEMENT OF JOHN S. GRAHAM, ASSISTANT SECRETARY, DEPARTMENT OF THE TREASURY, ACCOMPANIED BY PHILIP NICHOLS, JR., GENERAL COUNSEL, RENEGOTIATION BOARD; W. R. JOHNSON, ASSISTANT TO THE COMMISSIONER OF CUSTOMS; AND CHARLES MCNEILL, ASSISTANT GENERAL COUNSEL

Mr. GRAHAM. Thank you, Mr. Chairman. I have prepared, sir, a statement which covers the more important phases of the bill, which, with your permission, we would like to insert in the record.

Senator HOEY. That will be fine. It will be inserted in the record. Mr. GRAHAM. In the economy of time, Mr. Chairman, I invite your attention to a couple of the items in here which I think would give us a foundation from which any questions might be asked, either by you or the other members of the committee.

Senator HOEY. That will be entirely agreeable to the committee for you to proceed that way, Mr. Graham.

Mr. GRAHAM. Thank you, sir.

First of all, sir, on page 3, beginning at the third paragraph, the statement reads as follows:

This proposed legislation is part of the over-all management improvement program of the Department which was instituted by Secretary Snyder when he became Secretary of the Treasury.

The Secretary desired that an outside management firm of industrial engineers make an evaluation of the Customs Service. The Congress concurred, and the Eightieth Congress, first session, appropriated a specific sum of money for this purpose in 1947. After careful study the firm of McKinsey & Co., of New York, was selected to do this work. In the letter of authorization the objectives of the survey were stated to the management firm as follows:

To study the operations of the Bureau of Customs and the Customs Service with a view to promoting the efficiency of operations to the end of performing the duties and responsibilities with which the Customs Service is charged by law and in a manner that will protect the revenues and afford the greatest degree of service to the public. The end objective is to accomplish these results with the greatest degree of economy and the least possible cost to the Government.

McKinsey & Co., after completing their study, made a report which stated, among other things, that—

all things considered, the Customs Service is as well operated as the average business concern. However, we believe it can be improved.

The report made many suggestions and recommendations. For statistical purposes we considered that the report contained 178 recommendations. The majority of these recommendations, or 142 in number, were termed "administrative." That is to say, the recommendations, if approved, could be placed in effect by order of the Secretary, or the Commissioner of Customs, as the case might be. On the other hand, the recommendations which would require changes in existing law, were termed "legislative." There were 36 such recommendations.