CHAPTER III.

DUTIES AD VALOREM.

The most numerous, as well as, in some respects, the most striking and instructive class of cases published in these reports, is that which relates to the whole economical theory and fiscal practice connected with duties ad valorem; and before applying the examples themselves to the elucidation of this branch of the subject, it may be necessary to premise a few explanations to the general public, with reference to the actual incidents of these duties.

All articles imported from abroad, not otherwise enumerated in the British tariff, are subject to a duty of ten per cent.; and all articles to which specific duties are not thereby attached, or are not declared to be entitled to free entry, are subjected to various per centages of duty upon their value, ranging from 5 to 75.

It is unfortunate that no definition of the word "value" is to be found in the act of Sir Robert Peel. That tariff was introduced on the express principle of permitting the people of this country to buy in the cheapest market and sell in the dearest; and throughout its whole policy it assumed that in the production of many articles, natural and manufactured, foreign kingdoms could afford, with a large profit, to sell at a much cheaper rate than our own. To afford our own subjects the advantage of this greater cheapness, formed the main feature of the policy of the present tariff; and yet, in consequence of the omission by the legislature to define the term "value," the price in this country, in place of the country of origin has been made the criterion of the ad valorem appraisement of all goods imported, liable to duties leviable by a per centage on their value. Thus, should the Kamnitz manufacturer sell a certain number of dozens of three-thread hose currently at a price of £100, and the importer enter them at a duty of £10 per cent., while the Nottingham producers charge £200 for the same quantity and quality, it would appear that according to the principle of the award in Mr. Hope's case, mentioned below, the goods would be seized for undervalue, and the importer would be required to enter them at a valuation of £200, and pay £20 per cent. on their cost price, in the face of a tariff which allows them to be imported at a duty of £10 per cent., simply on the ground that the English manufacturer is unable to produce

the goods under double the price which they cost the foreigner, thus practically ignoring the whole policy the tariff was designed to carry

out.

This omission to remove the interpretation of the act out of the jurisdiction of the Board of Customs, is the more to be regretted, because the head authorities in the department of foreign revenue give, in their evidence before the Committee of the House of Commons, directly opposite definitions of this term "value." By reference to questions 134, 141, and 143, it will be seen that Sir Thomas Freemantle expressly declares " the criterion that we take, is always the market value in this country;" and on turning to question 1217, the public will be surprised to learn that in answer to the interrogatory "Do you take the market value of the goods in this country? Mr. Boyd, the Surveyor-General, distinctly replies "NO; we take the market value of the goods at the port of importation." What must be the utter bewilderment of the unhappy importer, ground betwixt the upper and nether millstone of these two directly opposite definitions by the Chairman of the Board and his own Surveyor-General, none but those who have been subjected to the process can adequatly realise-nor is it easy to conceive it possible to furnish better evidence of the practical hardship and extreme injustice inflicted by this fitful and uncertain system of management, than the fact that the merchant who should adopt the principle, and be guided by the decision, of the Surveyor-General in the entry of his goods, would have his property seized and himself regularly fined by the Chairman of the Board.

Uncertain as, from this evidence, appears to be the criterion of value in the minds of these conflicting authorities themselves, it might be expected that the avowed self-conviction of the consciousness of fallibility in the interpretation of the act and tariff by the fiscal judges, would lead them to the practice of a charitable construction of the acts of the merchant, in groping his devious way amid such pitfalls. But the system of the Board appears to hold out a premium to its officers for digging the pit and concealing it skilfully, and for rewarding them when the victim has innocently fallen in. It is scarcely necessary to explain that large quantities of goods are annually consigned to agents in this country, with regard to which, consigner and consignee alike must chiefly be guided in their estimate of value, by the price in the country which produced and exported them. In fixing the sum at which they are entered, they receive no assistance from the officers of the Customs, who are directly interested in inducing them to declare such a value as will enable them to place the goods under seizure, to earn the certain reward of the fine which is sure to be awarded in the event of a petition to amend, or to enjoy the chances of a profit on the sale, in the event

of abandonment; safe from the risk of loss in the event of the merchant's value failing to be realized at the retail auction in Mincing-lane. entitled to enter, as the value of his

Is a merchant, or is he not, goods, the price they cost him? Can he be accused of fraud if he does so? Is not the evidence of his bona fides at least prima facie, if he declares their worth to be what he paid for them? In fact, was it not the intention of the legislature, who framed the policy of the tariff, under which these duties are levied, to admit the cheap goods of foreign countries to competition with similar dearer articles in this country, on a protective duty simply of £10 per cent. upon their original price at the place of shipment? And if so, is it not enough that the Chairman of the Board should be of a different opinion, but he must fine every importer to the amount of the duty of which the entry falls short of his criterion, in supplement to the additional duty, for presuming to interpret the tariff as it is construed by his own Surveyor-General ?

For what is it that the officers of the Customs are appointed, but to levy the duties directed by the Crown? Why should it be left to the merchant to perform that office? Why should not the servants of the revenue themselves make the entries of value on being presented with a statement of the origin, nature, or quality of the goods—or if they do not themselves insert the proper duties, why may they not confer with the importer, correct or revise a draft entry, and agree with him what value is to be inserted in the fair copy of the entry? Are the Customs' forms to be a series of traps for the merchant, and the value to be a species of riddle which he must solve by good luck, or else pay a penalty for guessing wrong? Fraud must be proved not presumed. Intention is the essence of crime, not the bare act which follows it. Every man must be presumed to be innocent of crime, until he is proved to be guilty of it—and mere error, difference of opinion, diversity of interpretation, ought not to be visited with the penalties due only to fraudulent design, whatever may be the pretended necessities of the public service. Why should not an importer be permitted to amend an entry without petition, by simple withdrawal? Why should it not be amended by the officers who object to it, according to the value fixed in their own minds? What justification is there for a fine at all, or under any circumstances, for that which is a mere matter of opinion, about which parties may honestly differ? If the authorities do not choose to accept the valuation of the importer, what difficulty, except that of giving more trouble to those who should take all the trouble, is there in the officers at once fixing their own value, and presenting to the owner of the goods the alternative of paying the duty as fixed by the taxer, or accepting the amount of the officer's own appraisement, with the additional ten per cent. allowed the merchant by law?

That the valuation of the importers is honest and even liberal, is proved by the fact that the goods seized for under-value are on the whole sold at a loss to the Crown; and that the petitions to amend are no evidence of originally fraudulent under-entries, is notorious from the circumstance that in many cases the goods are sold, or required to be kept in stock for the customers of the merchant, before they arrive ; and he must have them, at any sacrifice, to fulfil his contract of sale, or to supply his usual customers.

It appears from the cases published by the Committee, that goods liable to ad valorem duties, are seized frequently on the mere speculation that the necessities of the merchant will require him to redeem his imports at any sacrifice—and that as he cannot recover them without a petition to amend, and can never procure leave to amend, without paying a fine, the profit to the seizing officer is certain, while he can lose nothing by the Crown sustaining a loss on payment of the value.

It further appears from the same evidence, that the system of fines and satisfactions holds out a premium to the officers to mislead the merchant, to withhold information or advice from him, to avoid all assistance to, or co-operation with him, in facilitating the business of trade. Even where a party petitions, and is permitted to amend, he is not informed what value he is to enter, to the end that he may glide into the new trap of a second time falling short of the fancied value which may be fixed in the minds of the officers; whereby a second seizure may be made, a new petition be required, and a fresh fine be exacted.

These inferences are those which are fairly deducible from the cases narrated in these pages; and the Committee are desirous to be understood as not committing themselves to them, but as merely sup plying corrollaries to the major and minor propositions, of which these cases are the postulates. Where instances are given of apparently an open defiance of their own fiscal laws, by the Customs detaining goods beyond the period of seven days after which they are bound to accept the articles seized at the merchants valuation; by postponing delivery or acceptance of the delivery order for weeks, until the result of an experimental sale of goods of a similar description to those under stoppage is ascertained; or by seizing free goods as liable to ad valorem duties, on the ground of being partly manufactured, and then, when they were abandoned by delivery order, returning them when they are likely to produce a loss, under the pretext of a subsequent discovery that they were not manufactured, and were entitled to a free entry-on all these points the Committee shall await the answers of the Board, without anticipating the conclusion.

But meanwhile it cannot be deemed premature to offer the following propositions for consideration:

1. As the aggregate annual amount of duties ad valorem levied, is considerably below £300,000, and they are confessedly, even by the Chairman of the Board, the cause of great annoyance and obstruction to trade, it is expedient, as a mere question of money revenue, to repeal them altogether. There may be questions of protection to the home producer, or of equalization of duties betwixt the excise paid by the domestic, and Customs levied on the foreign producer, which may modify this conclusion as regards some articles taxed by per centage and value; but with regard to other articles, this modification of the proposition is wholly inapplicable.

2. Although it would be impossible to substitute a perfectly symmetrical and exactly proportionate scale of specific duties on each article now liable to duties ad valorem, it has already been seen that the niceties of graduation contemplated in the theory of duties regulated by value, are totally inoperative in practice, and lead to abuse of power, or perversion of the interpretation of the material provisions of the statute, by the authorities of the Customs. It will remain for consideration whether, if the ad valorem duty goods cannot be admitted free, they should not be made subject to specific duties.

3. It ought to be determined by statute upon what principle the "value" is to be estimated-whether the price paid by the consignee, and at which in the common market of the world he could always purchase similar goods, is to be the criterion, to be established by his invoice as prima facie evidence of the cost; or whether, having no other guide in making his entry than the sum he paid, and no data for his calculations of profit but the actual cost, with the addition of the duty indicated by the tariff, he is to have these calculations disturbed by the application, as the standard of value, of the ruling price in this one market, of which he may know nothing until he is called upon to pay £20 per cent. on the invoice price, while his estimate of the venture was based on the postulate of a duty of only ten per cent.

4. There ought to be no fine for under entry, and no petition required for leave to amend. The officers ought at once to be bound to accept the tender of value made by the importer, or on the spot to demand the duty upon which they mean to insist; and in case of ohjection to the consignee's entry, it should remain in his option, not in that of the Board of Customs, whether he will pay the duty demanded by them, or abandon the goods, and entitle himself to the price fixed by their valuation.

5. Fines and satisfactions for mere differences of opinion in reference to the interpretation of a statute as to which the fiscal authorities are