In proceedings brought before the Board of General Appraisers by
protests under § 14 of the Customs Administrative Act of June
10, 1890, c. 407, 26 Stat. 131, to review decisions of a collector
of customs upon entries, the board has jurisdiction to inquire into
and impeach the dutiable valuation reported to the collector by the
appraiser upon which the collector assessed the rate of duty to
which the merchandise was subject.
The "German duty," which is a tax imposed by the German
government on merchandise when sold by manufacturers for
consumption or sale in the markets of Germany, but is remitted by
that government when the goods are purchased in bond or consigned
while in bond for exportation to a foreign country, was lawfully
included by the appraiser in his estimate of the dutiable value of
the importation in question in this case.
This case came to this Court on the following certificate from
the United States Circuit Court of Appeals for the Second
Circuit:
"A judgment or decree of the Circuit Court of the United States
for the Southern District of New York having been made and entered
on the 30th day of January, 1895, by which it was ordered,
adjudged, and decreed that there is no error in certain proceedings
before the Board of United States General Appraisers in this cause,
and that their decision therein be, and the same hereby is, in all
things affirmed, and an appeal having been taken from said judgment
or decree to this court by the above-named appellants, and the
cause having come on for hearing and argument in this court,
certain questions of law arose, concerning which this court desires
the instructions of the Supreme Court of the United States for the
proper decision of said cause."
"The facts from which said questions arise are herewith
submitted and certified as follows:"
"1. Certain merchandise, consisting of cotton velvets, was
imported from the empire of Germany into the port of New
Page 169 U. S. 17
York by the appellees in various steamers between May 22, 1891,
and March 13, 1892, and was entered at the custom house, and
appraised by the appraiser."
"2. The merchandise was originally imported into Germany in the
gray, and was subjected to processes of dyeing and finishing, and
was put in bond in that country."
"3. The collector classified the merchandise for duty under
paragraph 350 of the Tariff Act of October 1, 1890 at 20 percentum
ad valorem and 14 cents per square yard, and assessed the
said rates of duty upon the dutiable value of the merchandise
decided by the appraiser, and reported by him to the
collector."
"4. The merchandise was of a description provided for
eo
nomine in said paragraph 350, and was properly classified for
duty under that section."
"5. The invoices stated certain prices as the net invoice value
of this merchandise. The invoices stated also certain additional
sums, under the heading 'German Duty.'"
"6. This German duty is a tax which is imposed by the German
government on the merchandise when it is sold by the manufacturers
thereof for consumption or sale in the markets of Germany, but when
the merchandise is purchased in bond or consigned while in bond for
exportation to a foreign country, this duty is remitted by the
German government, and is called 'bonification of tax,' as
distinguished from being refunded as a rebate."
"7. This German duty or tax is the amount of the duty levied by
the German tariff upon the goods when consumed in Germany. It is
collected when the finished product goes into consumption in
Germany, but is remitted when the finished product is sold in bond
for exportation."
"8. The merchandise can be purchased in bond for exportation in
the principal markets of Germany at the net invoice prices, and
without paying the so-called 'German Duty.' The merchandise
involved in this action was so purchased for exportation."
"9. In estimating and appraising the actual market value and
wholesale price of such merchandise at the time of exportation
Page 169 U. S. 18
to the United States in the principal markets of the country
from whence imported, the appraiser decided that the dutiable value
of such merchandise equaled the sum of the net invoice value and
the German duty added together, and reported to the collector this
decision as to the dutiable value of the merchandise
appraised."
"10. In estimating this dutiable value. the local appraiser
added as an element of dutiable value to the net invoice value
these amounts specified in the invoices and entries under the name
of 'German Duty.' Such amounts had been included by the importers
in their entries under duress, to avoid threatened penalties under
the law."
"11. The importers did not call for any reappraisement of the
merchandise, but, within ten days after the liquidation by the
collector of each entry, and the assessment by him of the rates of
duty aforesaid upon the dutiable valuation so reported to him by
the appraiser, filed protests, under section 14 of the Act of June
10, 1890, against the decisions of the collector, of which the
following protest is one, to which the others are similar:"
"[Here followed the protest.]"
"12. The Board of United States General Appraisers, acting upon
said protests, reversed the decisions of the collector, on the
ground that the so-called 'German Duty' was not a lawful element of
dutiable value."
"13. Thereupon the collector applied to the Circuit Court of the
United States for the Southern District of New York by petition,
praying for review of said decision by the board, pursuant to
section 15 of the Act of June 10, 1890, and the said circuit court,
upon said petition, ordered the Board of United States General
Appraisers to return to the circuit court the record and the
evidence taken by them, together with a certified statement of the
facts involved in the case and their decision thereon, and the said
Board of General Appraisers thereafter made such return, and the
circuit court affirmed the decision of the board, as
aforesaid."
"14. It is admitted that Frederick S. Passavant, Karl
Kotzenberg, William Sandhagen, Heinrich Meyer, Arthur W.
Page 169 U. S. 19
Watson, and Oscar Passavant, the importers, are the persons
composing the firm of Passavant & Company."
"Upon the foregoing facts, this court, for the proper decision
of said cause, desires instruction upon the questions of law
following:"
"(1) In proceedings brought before the Board of General
Appraisers by protests, under section fourteen (14) of the Act of
June 10, 1890, to review the collector's decisions upon the entries
in this case, had the board jurisdiction to inquire into an impeach
the dutiable valuation so reported to the collector by the
appraiser, as above stated, and upon which the collector assessed
the rate of duty to which the merchandise was lawfully
subject?"
"(2) If the first question is answered in the affirmative, was
the 'German Duty' lawfully included by the appraiser in his
estimate of dutiable value?"
MR. CHIEF JUSTICE FULLER, after stating the facts in the
foregoing language, delivered the opinion of the Court.
The thirteenth section of the Customs Administrative Act of June
10, 1890, 26 Stat. p. 131, c. 407, relates solely to the
appraisement of imported merchandise, and declares that the
decision of the Board of General Appraisers, when invoked as
provided, "shall be final and conclusive as to the dutiable value
of such merchandise," and directs the collector to ascertain, fix,
and liquidate the rate and amount of duties to be paid on such
merchandise, and the dutiable costs and charges thereon.
Section 14 provides that the decision of the collector as to
the
"rate and amount of duties, . . . including all dutiable costs
and charges, and as to all fees and exactions of whatever
character, except duties on tonnage, shall be final and
conclusive"
unless the importer protests, and appeals to
Page 169 U. S. 20
the Board of General Appraisers. This section clearly allows and
provides for an appeal by the importer from the decision of the
collector as to both rate and amount of duties, as well as dutiable
costs and charges, and as to all fees and exactions.
By section 15 it is provided that
"if the importer, . . . or the collector . . . shall be
dissatisfied with the decision of the Board of General Appraisers,
as provided for in section 14 of this act, as to the construction
of the law and the facts respecting the classification of such
merchandise and the rate of duty imposed thereon under such
classification, they or either of them, may . . . apply to the
circuit court . . . for review of the questions of law and fact
involved in such decision."
In
United States v. Klingenberg, 153 U. S.
93,
153 U. S. 102,
it was said by Mr. Justice Jackson, speaking for the Court:
"The right of review by the circuit court is coextensive with
the right of appeal to the board as to all matters except the
dutiable value of the imported merchandise as to which the decision
of the Board of General Appraisers is by section 13 made
conclusive. Now, by section 14 of the act, if the decision of the
collector imposes an excessive amount of duties under an improper
construction of the law, the importer may take an appeal to the
Board of General Appraisers, whose decision on such questions is
not made conclusive, as it is in respect of the dutiable value of
the merchandise, and, not being conclusive, it is subject to review
under the express provisions of section 15."
The purpose of section 13 is to afford the importer or collector
the right to call for a reappraisement by a general appraiser or a
Board of General Appraisers, to review the decision of the local
appraiser or a general appraiser as to the correct amount of the
dutiable value of the merchandise, and is distinct and separate
from the remedy by protest.
Under section 7, the collector is to determine for himself the
question of what is the invoice value of the goods, and, in doing
this, he may add such charges as he considers to be dutiable; but
his decision in this respect is not in the nature of an
appraisement, and may be attacked by protest. And
Page 169 U. S. 21
while the general rule is that the valuation is conclusive upon
all parties, nevertheless the appraisement is subject to be
impeached where the appraiser or collector has proceeded on a wrong
principle, contrary to law, or has transcended the powers conferred
by statute.
Oberteuffer v. Robertson, 116 U.
S. 499;
Badger v. Cusimano, 130 U. S.
39;
Robertson v. Frank Brothers Company,
132 U. S. 17;
Erhardt v. Schroeder, 155 U. S. 124;
Muser v. Magone, 155 U. S. 240.
These decisions were made under prior similar legislation as to
the finality of the appraisement, and when an action against the
collector was provided by section 3011 of the Revised Statutes as
the remedy for an illegal exaction of duties. Section 3011 was
repealed by the Act of June 10, 1890, and in
Schoenfeld v.
Hendricks, 152 U. S. 691, it
was held that such an action could not be maintained, as it was not
authorized by statute, and would not lie at common law, because the
money was required to be paid into the Treasury by section 3010, so
that the importers were remitted to the remedies provided in the
latter act. Whether the dutiable value in this case was erroneously
increased by the unauthorized addition of an independent item to
the market value, as asserted by the importers, was a question of
law, and properly carried to the Board of General Appraisers by
protest and appeal.
We think that section 14 furnishes the means of redress for
illegal action, and that the Board of General Appraisers has the
same power, under this section, to inquire into the legality of an
assessment, as it has under section 13 to see whether or not the
valuation is excessive or insufficient through an error of
judgment.
The first question must therefore be answered in the
affirmative.
By section 19 of the act, it is provided
"that, whenever imported merchandise is subject to an
ad
valorem rate of duty, or to a duty based upon or regulated in
any manner by the value thereof, the duty shall be assessed upon
the actual market value or wholesale price of such merchandise as
bought and sold in usual wholesale quantities at the time of
Page 169 U. S. 22
exportation to the United States, in the principal markets of
the country from whence imported, and in the condition in which
such merchandise is there bought and sold for exportation to the
United States, or consigned to the United States for sale,
including the value of all cartons, cases, crates, boxes, sacks,
and coverings of any kind, and all other costs, charges, and
expenses incident to placing the merchandise in condition, packed
ready for shipment to the United States. . . ."
By section 10, it is made the duty of the appraisers
"by all reasonable ways and means in his or their power to
ascertain, estimate, and appraise (any invoice or affidavit thereto
or statement of cost or of cost of production to the contrary
notwithstanding) the actual market value and wholesale price of the
merchandise at the time of exportation to the United States, in the
principal markets of the country whence the same has been imported,
and the number of yards, parcels, or quantities, and actual market
value or wholesale price of every of them, as the case may
require."
Was the action of the appraiser lawful in treating the so-called
"German Duty" as an element of value in determining the actual
market value or wholesale price of these cotton velvets at the time
of exportation, in the principal markets of Germany?
What was to be ascertained was the actual market value or
wholesale price of the merchandise, as bought and sold in usual
wholesale quantities at the time of exportation in the principal
markets of the country from whence imported. This market value or
price was the price in Germany, and not the price after leaving
that country, and the act does not contemplate two prices or two
market values.
The certificate of facts states that the German duty is imposed
on merchandise when "sold by the manufacturers thereof for
consumption or sale in the markets of Germany," and "is collected
when the finished product goes into consumption in Germany." As the
tax accrues when the manufacturer sells, his wholesale price
includes it, and the purchaser who buys these cotton velvets in
wholesale quantities in the German markets pays a price covering
the tax,
Page 169 U. S. 23
and that is the price for the merchandise when bought and sold
in those markets.
Doubtless to encourage exportation and the introduction of
German goods into other markets, the German government could remit
or refund the tax, pay a bonus, or allow a drawback.
And it is found that, in respect of these goods, when
"purchased in bond, or consigned while in bond, for exportation
to a foreign country, this duty is remitted by the German
government, and is called 'bonification of tax,' as distinguished
from being refunded as a rebate."
The use of the word "bonification" does not change the character
of this remission. It is a special advantage, extended by
government in aid of manufactures and trade, having the same effect
as a bonus or drawback. To use one of the definitions of drawback,
it is
"a device resorted to for enabling a commodity affected by taxes
to be exported and sold in the foreign market on the same terms as
if it had not been taxed at all."
But the laws of this country in the assessment of duties proceed
upon the market value in the exporting country, and not upon that
market value less such remission or amelioration as that country
chooses to allow in accordance with its own views of public
policy.
Muser v. Magone, 155 U. S. 240, is
quite in point. In that case, the appraisement was attacked on the
ground that certain items or elements of value had been illegally
added to and included in the dutiable value. The imported goods
were cotton embroideries. The cloth was purchased in the gray by
the importers at Manchester, sent to St. Gall, Switzerland, where
the embroideries were finished, and thence exported to the United
States. The importers owned the plant at St. Gall. The entered
value of the goods was raised by the appraisers, and the importers
protested for the reasons that commissions and nondutiable charges
had been illegally included in the market value, and that the goods
should have been appraised at their actual market value when in the
gray, adding the cost of finishing and laundering them, and on
other grounds, the protest being particularly directed to the
Page 169 U. S. 24
alleged illegality of the valuation because one of the
constituent elements of the value as found was illegally included.
The appraisement was held conclusive in the absence of fraud, and
this Court, among other things, said:
"The question was not whether, through the special advantages
which Muser Brothers enjoyed, the actual cost to them may have been
less than what was decided to be the actual dutiable value of their
goods, for the latter was determined by the general market value
and wholesale price of all goods of the same description. . .
."
"The issue made by the protest was that the valuation was
illegal because including certain specified incidental expenses
[one or more of them], as for designs, salary of buyer, clerk hire,
rent, interest, and percentage on aggregate cost. Upon the theory
of an ascertainable market value at St. Gall, these were matters to
be considered, and, in a sense, included, but not in the sense of
substantive items, independent of market value, added thereto to
make dutiable value. . . . The course of business at St. Gall in
respect of these embroideries was peculiar, and to reach a result
in estimating the value required the consideration of many elements
making up the amount which actually represented the pecuniary basis
of transactions. How these various elements impressed the general
appraiser and what grounds influenced or controlled his mental
processes were matters in respect of which he could not be
interrogated, since his decision, when approved by the collector,
was final, and could not be reviewed and the verdict of a jury
substituted. . . . The adjudication was of true market value, and
did not consist in taking market value and adding the cost and
charges specified in section 2907 in order to get at dutiable
value."
United States v. Kenworthy, 68 F. 904.
As the question in this case was what was the general market
value and wholesale price of cotton velvets as bought and sold in
the principal markets of Germany, the fact that the German duty was
not in fact paid on such goods when exported is immaterial.
Exoneration from its payment was a mere special advantage, extended
by the German government,
Page 169 U. S. 25
as we have said, in promotion of manufactures and commerce. The
appraiser found as matter of fact that the market value in Germany
was equal to the invoice price plus the home duty, but he did not
therefore include that item as a substantive item, independent of
the market value, and add it thereto to make dutiable value,
though, in ascertaining the market value in Germany, he properly
recognized the fact that that duty formed part of the purchase
price in the markets of that country.
The second question must also be answered in the
affirmative.
The answers indicated above will be so certified.
MR. JUSTICE BROWN, with whom concurred MR. JUSTICE PECKHAM,
dissenting.
I concur in the opinion of the Court that the first question
requires an affirmative answer, but I think that the second
question should be answered in the negative. In estimating the
dutiable value of goods, the collector added to the net invoice
value what is known as the "German Duty," which was never paid, and
which formed no part of the "market value or wholesale price" of
these goods. It does not appear what proportion of this class of
goods was imported into Germany for exportation, as distinguished
from those imported for consumption, but it clearly appears that
there were two entirely distinct and separate prices, one of which
was paid for the goods for exportation and the other for
consumption. It seems a great hardship that the defendants,
Passavant & Co., should be charged with a price which they did
not pay, and which was no part of the value of the goods as they
were purchased by them in Germany. If there be in fact two
wholesale prices for these goods in the same markets, I know of no
reason why the collector should not recognize this fact and charge
the importer with that one of the wholesale prices which he
actually paid, and for which others, under the same circumstances,
could obtain the goods.
The construction given to the statute by the Court is
unnecessary,
Page 169 U. S. 26
and the effect is to increase the cost of the article to the
consumer by adding to the price the amount of a tax in fact not
paid by the importer. For aught that appears in this record, the
sales for exportation may have been ten times as great as those for
domestic consumption, and we do not understand why the prices
realized in the latter sales should be arbitrarily selected by the
government as the actual market value or wholesale price of the
articles.
I am authorized to state that MR. JUSTICE PECKHAM concurs in
this dissent.
