HC Deb 18 June 1935 vol 303 cc297-319

9.52 p.m.


I beg to move, in page 10, line 5, to leave out "they would fetch on a sale," and to insert: an importer would give for the goods on a purchase. Before I open the discussion upon this Amendment, I should like to ask your guidance, Captain Bourne, upon this matter. You will observe that there are a number of Amendments standing in my name upon this Clause which are in fact Amendments of a verbal character, though very important points of principle are involved. I would ask whether you would consider it convenient, and if so would permit, that I should open a general discussion on this Clause on this Amendment, on the footing that I either do not move or merely move formally any other Amendments standing in my name upon this Clause.

9.53 p.m.


I have closely studied the Amendments to this Clause standing on the Order Paper, and it appears to me that the Amendments in the name of the hon. and gallant Member for North-East Bethnal Green (Major Nathan) really form, with perhaps two exceptions, part of a scheme, and that scheme would cover the Amendment standing in the name of the hon. and gallant Member for the City of London (Sir V. Bowater)—in page 10, line 5, after "sale," to insert "to an importer"—and the Amendment in the name of the hon. Member for South-West Bethnal Green (Sir P. Harris)—in line 6, after "importation," to insert: less an allowance in respect of duties of customs and reasonable merchanting expenses and profits incidental to the marketing of the goods after importation. I think it would be for the convenience of the Committee if we took a general discussion on this scheme on this first Amendment. The two Amendments that I should select otherwise are those standing in the names of the hon. Member for Cardigan (Mr. D. Evans)—in line 23, to leave out "and will not be"—and the hon. Member for Huddersfield (Mr. Mabane)—in page 11, line 26, to leave out "a get-up," and to insert "style of production or finish"—which raise separate points not, so far as I can ascertain, covered by the other Amendments.

9.54 p.m.


I am greatly obliged for the guidance which you have given me. There is no doubt that the provisions of this Clause have inspired a widespread feeling of alarm in the minds of the commercial community of this country. Association after association of manufacturers and merchants without any special political bias have addressed communications to the Chancellor of the Exchequer upon this subject. I have with me copies of some of those communications, and also the answer given by the Chancellor, to which I may have occasion, with his permission, to refer. Hon. Members may perhaps remember that when the matter of Import Duties was under discussion in this House I was one of those who took a part in opposition to the whole policy underlying the Bill. I have nothing to say about that to-day. The policy is part of the law of the land, and this Bill merely deals with the question of the administration of that policy. It is to that point of view alone, as a matter of business administration and the effective carrying out, to the satisfaction of the business community, of the provisions of the Statute, that I would limit myself this evening.

It is a matter of great complexity to arrive at what is the open market value of any product which is subject to an ad valorem duty, and I do not minimise it in the least. It is a common misapprehension that the price which is paid by an importer to a foreign exporter is the criterion by which is to be judged the value of the goods for the purposes of duty. That, of course, is entirely erroneous. It was not so under Section 15 of the 1932 Act, nor is it so under the Clause now under discussion. Although open market value was to be the test in each case, I do not think I am exaggerating if I say that the Clause now before the Committee in effect repeals, and is designed to repeal, the central, effective, operative provision of the Act of 1932 upon which the whole fabric created by that Act depends, and creates something entirely new. The definition of the values which are to be assessed by the Commissioners of Customs and Excise is entirely new. Let us compare the old section with the new Clause. They both depend upon open market value. The point is how open market value is to be defined. In the Act of 1932 it was defined as being the price which an importer would give for the goods on a purchase in the open market. In Clause 10 of this Bill it is to be defined as the price which they would fetch on a sale in the open market. There is a world of difference between the two; there is the whole of the spread between the prime cost and the profit value of the goods. What the commercial community is anxious about is lest the duty will in future be charged, not upon the buying price, but upon the selling price of the goods and that an importer will have to pay, not upon the cost of the goods to him, but on the cost of the goods plus some element of profit. I say "some element of profit" because it has never yet been defined, either by law or in practice—and it is high time it was defined—at what stage of the journey from the place of importation to the ultimate consumer the valuation is to take place. The Bill is entirely silent on that point, as the Act was silent.

There are various categories in the process of importation. There is the wholesale manufacturer who imports his raw materials; there is the wholesale merchant and there is the retailer; and there is a long list of categories of those through whose hands the goods may pass from the moment they arrive at these shores, which is the time at which the value ought to be ascertained, till they reach the hands of the ultimate consumer, which, for all this Bill says, may be the place at which the value is to be ascertained. There is not really very much doubt about the matter under the Act of 1932. That Act provided that the value was to be the price which an importer would give. An importer giving a price naturally gives the lowest price at which he can get the goods. As a result of the haggle of the market in this notional open market he gets the goods at the lowest price at which he can get them. When, however, we come to the phraseology of this Bill, the whole bias, twist and temper is entirely altered.

Now it is to be the price which the goods will fetch, which means, of course, the highest price which can be obtained for the goods. I think it has been defined by the court of appeal in a recent case that open market value is the price at which goods will be offered to all and sundry. "All and sundry" may begin with the importer and end with the ultimate consumer. It is important to know at what point the value is to be assessed.

Let me put the matter in a practical form as the result of some day-to-day experience in dealing with these matters with the Customs authorities. I quote concrete cases, because I hope to get in answer to them an indication from the Chancellor of what is really meant by these provisions. In doing so, let me say that it has fallen to my lot since the Finance Act of 1932 was passed to come in contact a great deal with the authorities at the Customs office, and I have nothing but admiration for the ability, courtesy and skill with which they have undertaken new and arduous tasks. I do not agree with their procedure in many cases. I think it is entirely wrong, and I have been successful in proving it is wrong. Nevertheless, I would like to take this opportunity of expressing, not only my own feeling, but that of the commercial community, as to their courtesy and ability. They are the most charming pirates who ever scuttled trade.

Let me give practical examples that have fallen within my knowledge and ask the Chancellor how this Bill will operate in such instances. There is a case of boots and shoes arriving by the same ship, consigned from the same manufacturer upon the same terms except as to price, contained in the same crate, and delivered at the same port in equal quantities. One parcel of the goods, let us say, 100 gross, is consigned to a wholesaler in London, and the other parcel of 100 gross is to be delivered to a retailer. What, in the view of the Chancellor of the Exchequer, is the value to be attributed to either or both of these importations? This is an actual case which occurred in practice. The Customs authorities contended that because in one case the goods were consigned to a wholesaler and in the other to a retailer, although the goods were precisely the same, the same quantities, the same deliveries and the same crate, nevertheless import duty was to be paid in the case of one parcel of these goods at one value and in the case of the other parcel at the other value. One parcel bore duty at the wholesaler's price and the other was designed to bear duty at the retailer's price. It was contended, as I think it must be obvious is the case, that the same goods imported on the same terms to the same place at the same time can have only one market value for all purposes whatsoever, and, of course, that was the view which ultimately the Customs conceded. I want to know what view they will take under this Bill in such an instance as that?

Let me give another case. Let me assume, as is the fact, that fancy goods, let us say ash trays, are bought by an English importer at 4½d. and sold in the ordinary retail shop at 1s. They are sold by the importer to Woolworths at 6d., by the importer to Selfridges at 8½d., and sold by Selfridges at 1s. I want to know from the Chancellor of the Exchequer at what point in that chain from the 4½d. importation to the ultimate destination at a shilling the value of these goods is to be ascertained. They are the same goods. I would like to know the answer to that very practical question which affects every trader in this country. At the present time he does not know in the least what his obligations are to be. I said a few moments ago that he did have some opportunity under the 1932 Act of knowing what his obligations were to be, for the reason that at least the 1932 Act did prescribe certain criteria by which the market value for the purposes of the Statute might be ascertained. It did lay down certain criteria to which regard might be had by the Commissioners of Customs and Excise in assessing the value. But there are no criteria in this Bill. They are specifically repealed. On page 11, line 27, the Bill says: Sub-sections (1) and (2) of Section fifteen of the Import Duties Act, 1932, shall cease to have effect. Sub-section (2) is the only provision in the 1932 Act which provides any criteria by which the Commissioners of Customs and Excise may be guided in assessing the ad valorem value of goods for the purpose of the Act. That is all gone, and we are left with this. It is the open market value at the time of importation, and the duties shall be paid on that value as fixed by the Commissioners. Surely it is one of the first principles of every tax law that the subject shall know what it is. I daresay that I shall be told that these words, "as fixed by the Commissioners" appear in the Act of 1932. It is true that they do, but they are qualified by Subsection (2).


There is Subsection (2).


I have not come to Sub-section (2). I am still on Subsection (1) of this Bill. What were the criteria laid down in the Act of 1932? In some cases they have not worked extraordinarily well, but they were capable of adaptation, with mutual good will, to the circumstances of most cases. I am not speaking theoretically; I am speaking as the result of practical experience. In the first place, the Commissioners were to have regard not only to the invoice price but to all relevant circumstances and in particular—and then a whole code is set out. Parliament was so careful in 1932 to protect the taxpayer that it did not give the Commissioners of Customs and Excise even the choice of alternatives, and the Commissioners had to pass through each of three ways if necessary before they could assess the value. Parliament said that the Commissioners may have regard—and "may" of course here means "shall"—to the price which at the time of importation of the goods other importers are paying for the like goods. That was one way of ascertaining what the open market was. The present Bill uses the term "open market," but it repeals the definition of open market. It is silent as to what "open market" means. If there were an open market, if other importers were importing the like goods, the price which other importers were paying was, until this Bill, the value on which importers of like goods were assessable for duties. If there were no market value, if the goods were so unlike other goods that they were not comparable with other goods, then, and only then, another criterion was set up by the 1932 Act. Then the Commissioners were entitled to look at the price which was fetched by the goods. I am using the phrase of Clause 10. They were entitled to look at the price fetched by the goods, and that price was the assessable value, but after making a deduction for profit and merchanting expenses. That is all gone. In this Bill the deduction for profit and merchanting expenses has disappeared, just the same as the criteria have disappeared. The Act of 1932 went still further. It said that if there was no market in these goods if they were not to be sold on importation from abroad, then you should take another criterion; but there, again, provision was made for an allowance for merchanting expenses, for profit, and the rest of it. All that has gone from this Bill. I think I may refer to a letter from the Chancellor of the Exchequer to the London Chamber of Commerce?




The Chancellor of the Exchequer, in a letter written for communication to the London Chamber of Commerce, said: The London Chamber of Commerce has suggested that this Clause 10 proposes a new basis of value of imported goods for duty purposes. This, however, is not the case. I ask the Chancellor of the Exchequer to read the Act of 1932, for which he was responsible, and Clause 10 of this Bill. To say that there is no new basis for the value of imported goods is something which, I am sure, on reflection, he will realise cannot be substantiated. He may say that it is not the intention of the Customs' authorities to make any change, but if that is so why make a change in the Bill, why repeal those Sections? Then the Chancellor goes on to say: The value is still to be the open market import price. There is nothing about that in the Bill. It says the open market price, but the word "import," upon which a good deal depends, is absent from the terms of the Bill; and I may say that those trade associations to whom this letter, and others like it, have been circulated are in the greatest alarm as to what may be meant by those words, and in the greatest doubt as to how it came to be that the Chancellor of the Exchequer should define the terms of the Bill in his letter in a different form from that in which the words appear in the Bill itself. The Chan- cellor of the Exchequer goes on to say—I am paraphrasing his words, but I will quote where necessary—that it is essential that some machinery should be created so as to ensure that imported goods shall not be undervalued on the basis of a special price to a nominee of the supplier abroad. We shall all agree about that. The assessable value for the purposes of duty should be the proper value, if you like the open market value, but do not take away the definition of the open market value, do not allow the British subject to be left entirely in the hands of the executive. He was not left entirely in their hands by the Act of 1932, and the courts have come to the rescue of the subject in cases arising in this context, and have themselves stated what is the value and how this Section of the 1932 Act was to be operated by the Commissioners.

I want the Committee to understand that I am only speaking once on the whole series of Amendments, and therefore they will perhaps allow me to deal with what my hon. Friend the Member for Central Leeds (Mr. Denman) referred to as Sub-section (2). Perhaps the Chancellor of the Exchequer can answer this question. He has the advantage of my right hon. Friend the Home Secretary at his side. It has puzzled lawyers and commercial men, who are unable to understand what this Sub-clause (2) is doing in the Bill at all having regard to the provisions of Sub-section (1). There is no definition of open market value, but by this Bill as it stands the subject is entirely in the hands of the Commissioners. Perhaps I ought to qualify that. In certain cases, the subject has a right of appeal to a referee appointed under the Bill, but that right of appeal is somewhat illusory. Very few taxpayers are keen on embarking upon litigation against the Crown. They do not like starting it, even though they know that they are being unlawfully overtaxed, and often admittedly so. They say, "We do not want to get up against the Customs. If we make a protest, or if we take this matter to the referee, there will be a black mark against us." I am speaking as a result of day-to-day experience of dealing with taxpayers whose operations bring them within the scope of the Clause, and I know that there is not merely a feeling that they do not want to get up against the Customs, but an objection to the expense and delay that are involved.

Let me give the Committee an actual instance involving a large sum of money and raising an important question of principle. The subject was a taxpayer who thought that the principle involved was so important that it ought to be taken to the referee. The dispute arose on 18th April, 1932, and notice of reference was given in July, 1932. The subject had been made to pay on deposit more money than he was liable to pay. The case came on for hearing in September, 1933, and took four days to hear. It was not heard day by day. The first hearing was on 29th September and the last on 17th October, 1933, 18 months after the dispute arose. The decision was not given till 13th December, two months later. When the decision was given, it seemed so open to criticism that notice of appeal was given. The appeal was regarded as of great importance. It was the last case that Sir Boyd Merriman fought, and when it went to the Divisional Court the Solicitor-General represented the Crown. The case took two days to hear before the Divisional Court, and came to an end with judgment in May, 1934, two years from the time when the dispute arose. The judgment was in favour of the subject, but during those two years the Customs authorities had, under the authority of the Act, been collecting thousands of pounds in duty to which they had no right, and which they had to repay. So great was the amount, and so onerous in its burden, that it almost smashed the business to get the duty back, and it cost the taxpayer in the case upwards of £2,000 to fight it.

It is said that the subject is not in the hands of the Commissioners, but who, in the face of facts like these, is going, except in the direst extremity, to take the matter to the courts? It is eyewash to suggest that the subject has any outlet for airing his grievance. The market value will have to be fixed at the discretion of the Commissioners, who are now reinforced by the fact that the old limitations upon the exercise of their discretion have been repealed by the active act of the House of Commons, or will have been when the Bill is passed. I cannot understand why Sub-section (2) is in the Bill. Market value is a question of fact, to be ascertained by evidence. It does not depend upon the price which the imported goods have fetched; it depends upon the price which other goods of the same kind fetch. The scheme of Sub-section (1) is not what the goods have been sold for, but what the goods might be sold for in the open market, and you can only test what a particular parcel of goods might be sold for by reference to what an actual parcel has been sold for. Therefore, as I have said, I fail to understand why Sub-section (2) is in the Bill. It says that certain assumptions are to be made, but you do not want assumptions if you are to be guided by market value, because market value is a fact; it is objective evidence.

Market value is ascertained without reference to any assumptions at all, except that there is a market value; and, where there is not a market value, the Bill provides no mchinery for valuing the goods, and the goods will be free of duty, because the only Section of the Act of 1932 under which goods without a market value could be assessed for duty is being repealed. There are vast quantities of goods which within the meaning of the Bill have no open market value at all, and, presumably, probably owing to an oversight, they are to escape duty altogether. The Commissioners have to assume the price, but the price as between the importer and the foreign exporter is irrelevant to the market value. Then they are to assume that neither the seller nor any person associated with him has any interest in the goods; but that also is irrelevant in dealing with open market value, because open market value is a fact, capable of evidence. If it is not, there is no open market value, and then there is no machinery under the Bill for assessing the value.

The whole of the assumptions which are to be made under Sub-section (2) are irrelevant to the scheme of the Bill as set out in Sub-section (1). I say nothing of Sub-sections (3) and (4), which deal with minor and technical matters, but I come to sub-section (5), which is really related to Sub-section (2). On the footing of the Bill as drawn, certain assumptions are to be made, but there is nothing in the Bill to say what happens if those assumptions are false. The Bill is entirely silent as to what must be done in that case. Subject to a later Sub-section, the Commissioners cannot inquire, or are not concerned to inquire, as to the facts, because they are told to assume the facts, and, therefore, whether they exist or not is a completely irrelevant matter.

I must draw the attention of the Committee to what must be one of the most humorous provisions that ever appeared in a Bill, though it is not humorous at first sight. It is provided that two persons are deemed to be associated with one another in business if either of them, directly or indirectly, has any interest in the business or property of the other—nothing is said about a controlling interest, but any interest in the business or property of the other; or if both of them have a common interest in any business or property; or—and here is the gem—if some third person has an interest in the business or property of both of them. What a gem! It is marvellous. In the first place, neither the buyer nor the seller may know whether a third party has an interest in the business of either or of both of them. Assume that I am a shareholder in the International Nickel Company and in the Austin Motor Company. Let us assume that the Austin Motor Company buys nickel from the International Nickel Company. They are associated in business together for the purposes of this Bill because I, a third person, have an interest in the business or property of both of them. That is what this Bill says, but the Bill does not say what happens if that is the case. In Subsection (2) the Commissioners are told to assume that that is not the case, and in Sub-section 5 we are told that it may be the case, but in neither event are we told what is to happen if it is the case. I am justified in saying, with a sense of responsibility, that lawyers who have studied it and business men who will have to operate the Act say that it is unintelligible nonsense. Sub-section (2) of Section 15 is to be repealed by this Bill, yet Sub-section (2), as I pointed out before, alone qualifies the powers of the Commissioners.

I have not gone into details of any of the Amendments which I have put on the Paper. I think that it would be for the convenience of the Committee that rather than do that I should leave the matter on the basis of a general discussion, but I would say to the Chancellor of the Exchequer that this is not a question of politics but of business. There is a real anxiety pervading the whole commercial community, and I know that many communications have been addressed by troubled public bodies to the Chancellor of the Exchequer on this subject. It may be that the valuation provisions under the administrative provisions of the Act of 1932 require amendment in the light of experience, but I most seriously say to the Chancellor of the Exchequer—and I should say it equally well if I were standing behind him instead of in front of him—that the Clause ought to be withdrawn and reconsidered. It really is not a Clause which has received that grave and careful consideration either in its content or in its drafting that provisions should receive when incorporated in an Act of Parliament affecting every trader in this country.

10.34 p.m.


The hon. and gallant Member has taken advantage, though not an unfair advantage, of your Ruling, Captain Bourne, in order to range very widely over this subject, and a great deal of his speech, which was intended to deal with introducing reforms and alterations in the present system, was devoted to an attack upon the system as it has worked in the past, and to show absurdities which have in the past arisen. He began by saying that he was against the principle of the taxation of imports. That is a view which a good many Members share, but we are not discussing that principle this evening. I am, however, sure that all those who take that view are anxious that once the principle has been introduced it should be fairly applied. Listening to the hon. and gallant Member anyone who did not know the facts would not realise that this Clause is solely designed to carry out the intention of Parliament and the intention of the law as it stands to-day, and to try and defeat the devices of those who are at present successfully cheating and breaking the law.

The speech of the hon. and gallant Member has not shown that this Clause will in any way fail in its endeavours, nor has he made much attempt to support his Amendment in favour of reintroducing the word "importer." He has not made any case out at all for that. He gave us a picture of a lot of timorous taxpayers trying to import their goods according to law, but frightened by the powerful and unscrupulous Customs, who would brow-beat them and who if they took them to court would have a grudge against them for the rest of their existence and would inevitably do them down. The facts are exactly the opposite. The hon. and gallant Member himself paid tribute to the courtesy and efficiency of the Customs. The truth is that the Customs are not able to carry out their duties owing to the series of devices which have been introduced since this taxation became law, for the sole purpose of defeating the law and cheating the community. The Committee is probably well aware of the kind of device adopted by so-called groups of foreign importers who consign these goods at false values, on which they are taxed.

In many cases an agent or a traveller of a foreign firm puts a brass plate on his door and becomes an independent business, to whom the goods are consigned. The goods are valued at very much below their real value. There was a case recently where an agency of this sort was set up and in the lease of the office that they had taken they made it a condition that should they be obliged by any legislation subsequently passed to declare the real value of the goods consigned to them their tenancy was to come to an end. That is the kind of thing that we are trying to defeat, and, if the hon. and gallant Member were aware of that kind of thing, I feel sure that he would be as anxious as we are to defeat it. The real object is to find out the true value of the goods that are imported. It is not an easy thing. The hon. and gallant Member from his long experience showed us how difficult it is and how easy difficulties may arise.

He put two conundrums for me to answer. When he first said that he was going to ask me a riddle I was extremely nervous, but I must say that I was surprised that with all his ingenuity he could not find a more difficult riddle than the two that he set. The first was this. There were two crates of boots and shoes of equal value, one consigned to a wholesale dealer and one to a retail dealer. Under the present system they would have different values—


They do not in fact pay on the price, but on the market value.


In the case of the crates to which the hon. and gallant Member referred they would pay on the same value. In the past officially we have had to take into account the invoice value, and the invoice value given by some importers has been considerably less than the market value. Then there was the case of the ashtrays consigned to wholesale firms, which the hon. and gallant Member traced through different hands and were sold much more cheaply by one firm than by another. He asked what is their value. I should say that provided the Customs officials were satisfied that the wholesale importer was really paying the right price of 4½d. that that value would be assessed for Customs duty.


Will the hon. Member put that in the Bill?


That is the object of the Clause. The whole object is to bring that about, and it certainly would not be secured by the hon. and gallant Member's Amendment to insert the word "importer" instead of the word "buyer." The object of the Clause is that goods shall pay on the value they possess at the time and place of their importation, that is if they were sold there. The hon. and gallant Member made a point about market value. The whole object of the Clause is to find out the value they would have if they were sold at the time of importation in open market. The wholesale importer would then pay on their true value. The hon. and gallant Member referred to Sub-section (2) of Section 15 of the Import Duties Act, and said that it was a great pity it was being repealed as it provided the Commissioners with the only guide they had for coming to a decision. In a case which recently appeared in the courts, a very distinguished judge said that he considered the Section otiose and unnecessary; there was no point in it. It merely gave the Commissioners the right to say that they might take into consideration all various considerations before arriving at their decision, and that they were things which the Commissioners would always and must take into consideration. It makes therefore little difference whether that particular Section remains in force or not. The hon. and gallant Member made some play with regard to Sub-section (5) and Sub-section (2). They must be read in conjunction with the rest of the Clause. Sub-section (2, c) says that neither the seller nor any person associated in business with him has any interest, direct or indirect, in the subsequent re-sale or disposal of the said goods,' That must be taken into consideration with paragraphs (a) and (b) of Subsection (5) as the object for which the whole Clause is designed. The hon. and gallant Members says that the object is not achieved. In that case it can be easily altered before the Bill is passed, and I will certainly take advice as to whether it is achieved or not. There is no doubt as to the intention of the Clause. The hon. and gallant Member also said that the whole commercial community is profoundly disturbed. That is not the evidence which we have received. We have learned, on the contrary, that those firms which indulge in honest business are extremely glad that this Clause has been introduced, as it is designed to catch out those who unfairly compete with them by breaking the law. Both the foreign importers and the British importers are glad of this assistance to them to prevent unfair competition by law-breakers. We could not have stronger evidence of that fact than a letter which my right hon. Friend the Chancellor of the Exchequer has received from the Federation of British Industries. It is dated 12th June, and signed by the President: It has been brought to my notice that attempts are being made in certain quarters to organise opposition to the new valuation clause 10 of the Finance Bill. I think you may be interested to know that copies of this clause have been circulated both to the members of our Tariff and Commercial Treaties Committee and to our leading trade associations, and their replies reveal an almost overwhelming con-census of industrial opinion in favour of the new clause.

10.47 p.m.


I am sure the Committee will agree entirely with the purpose of this Clause. The Financial Secretary referred to certain evasions of the Customs and referred to certain cases before the courts—cases with which I have some acquaintance. It certainly has been a mystery to some of us engaged in certain industries as to how certain foreign importers have been able to sell goods in this country at the price at which they have sold them. In the case which was referred to they had been able to sell the goods at that price by an evasion of the intentions of Parliament. So far I am in entire agreement with the purpose of the Clause. But I do want to ask that one of the points raised, which is of some concern to people interested in buying goods from abroad, might be dealt with. One sees in the first part of this Clause: The value of any imported goods shall be taken to be the price which they would fetch on a sale in the open market at the time of importation. That does raise an important point, as the Financial Secretary knows. It is often necessary to buy goods from abroad nine months in advance, and between the time of the goods being bought and the time of their importation into this country the value may have changed substantially. I am sure that the Financial Secretary would not desire to discourage the enterprise of importers in this country who buy goods from abroad for the purpose of trade and who take advantage of a good price, say in March, and then when November or December comes along and the price is altered, to compel them to pay duty on the higher price that may be prevailing in one of those later months. I do wish that he would deal with that particular point. The Financial Secretary did not deal with the further point raised by the hon. and gallant Member for North-East Bethnal Green (Major Nathan) regarding Sub-section (2, d) of this Clause, which says: For the purposes of computing the price aforesaid it shall be assumed— That there has not been and will not be any commercial relationship between the seller and the buyer.


There is an Amendment on the paper to leave out the words "and will not be," which I propose to call.


I thought that we were dealing with all the Amendments to the Clause now, for convenience sake.


Perhaps I should state that there are two Amendments that I propose to select. One is in the name of the hon. Member for Cardigan, in line 23, to leave out the words "and will not be," and the other in the name of the hon. Member himself.


Then perhaps I shall have an opportunity of dealing with the point when my Amendment is called. The principal point is that which I raised first and which is a matter of substance, and I should be glad if we could have an explanation on it.

10.50 p.m.


I think that the reply of the Financial Secretary to the Treasury to some of the points raised was somewhat unsatisfactory. It did not meet the main point of the objection to this Clause as drafted. It appears to me as a layman fairly clear that the Act of 1932 fixes the value for the purpose of the duty as the value any importer would pay; but the value as fixed by the Bill is the value which the goods would fetch if sold by the importer on the open market, so that there is a very wide difference in the meaning and in the change from the 1932 Act to this Bill. One levies duty on the value which the importer pays, or, in the words of the 1932 Act, "which any importer would pay;" that is to say, the generally accepted import price; and this Bill levies duty on the price at which an importer would sell. Therefore, you have the difference between the buying price and the selling price, and that is a very material consideration. It seems to me that the answer which the Financial Secretary has given is not satisfactory and is not sufficiently clear. The commercial community have a right to know whether they are expected to pay duty on the price they paid for their goods or whether they are expected to pay duty on the price at which those goods would be sold by them in the open market. The next point, to which there was no answer at all, is the introduction of the words "as fixed by the Commissioners." That seems to me to be a somewhat dangerous innovation in the Finance Act, in that the power of the Commissioners to fix a price is greatly strengthened and widened.

I am sure that every Member of the Committee would, in devising such provisions, desire to make them watertight so that some dishonest persons do not by various devices escape duty which honest people pay. It is necessary for the Financial Secretary not only to maintain that attitude, but to show the Committee that he has in fact designed a Clause which will have that effect and no other effect. If, as appears, this Clause does something else then the Clause should be amended in conformity with the intention. It seems to me that it cannot be intended in seeking to define people who are interested, in the sense that the importer is also the exporter, to introduce a definition which brings into that category two companies where the only relation between them is that they have common shareholders. I think it would be very difficult to find large importers who were not connected with other people to whom they were selling by common shareholdings. This Clause seems to be so loosely drawn as to be not only absurd but as to defeat its very purpose; because in interpreting it the mesh is bound to be drawn so wide that the very fish it is designed to catch will slip through.

There seems to be one other point to which no answer was given, and that is that having determined in the first Subsection of Clause 10 the price upon which duty shall be paid as the open market price at which the importer will sell his goods—a thing which can be determined by reference to fact—there then follow a quite unnecessary set of rules for determining what is already determinable. Secondly, in applying these rules, it is assumed that neither the seller nor any person associated in business with him has any interest, direct or indirect, in the subsequent resale and that there is no commercial relationship between the buyer and the seller. Yet Sub-section (5) provides that two persons shall be deemed to be associated if there are common shareholders. I suggest that on a matter of first-class importance such as this, the Committee should not be satisfied merely by the statement that the Clause is directed against dishonest importers, but should have the assurance that it will achieve the declared intention.

Amendment negatived.

10.57 p.m.


I beg to move, in page 10, line 23, to leave out "and will not be."

I confess I was not satisfied with the reply of the Financial Secretary when he endeavoured to explain these words: It shall be assumed … that there has not been and will not be any commercial relationship between the seller and the buyer. I cannot conceive how it will be possible to make any such assumption as to the future. It is very important that the honest importer should be protected, and I understand that there are some people in this country and elsewhere who have no conscience when it is a matter of defeating the tax collector, just as there are some who adopt that attitude towards the railway ticket collector. But I want the Chancellor of the Exchequer to believe that the object of most of us is to see that the bulk of the importers get fair play. Reading this Clause I cannot understand its object. It seems to me rather sinister that consideration should be given to what is to happen in the future, regarding the relation of the buyer and the seller, and I am confirmed in that view, as I think the Committee will be confirmed in it, by reference to Clause 15. Under that Clause an officer of Customs and Excise may at any time within three years after delivery of goods require any person concerned to give information and produce books and documents. These words relating to the future relations of buyer and seller ought to be omitted.

11.0 p.m.


The hon. Member has, I think, unnecessary suspicions about the wording of this Sub-section. It is one of the assumptions which has to be made for the purpose of eliciting the price at which the goods are to be valued, and it is designed lest there should be a commercial relationship between the foreign seller and the importer of a kind which would enable the importer to value his goods below their real value. We have put in words securing that the assumption is to be not only that there is not now such a relationship, but that there will not be in future. The hon. Member seems to think there is something sinister about that, but surely it must occur to him that if there is a desire to make an arrangement of that kind between the seller and the importer, it is not necessary for their purpose that there should now be such a commercial relationship. All that has to happen is that the importer says, "If you will invoice to me at a lower price than the real price, I will undertake to render you certain services this day week or this day year." Therefore, we must assume—it is only an assumption for the purpose of fixing the value—not only that there is no existing relationship between the two persons of that kind, but also that there will not be in the future.

11.2 p.m.


Is it not possible, by words of a different nature, to cover the point which the Chancellor of the Exchequer has in mind? It is obvious that if a declaration has to be made in order to get a payment of Customs duty at a certain rate or on a certain valuation, the person making that declaration may, quite innocently at the time, say that he will not have any commercial relationship with the person with whom he is making a contract, but at a subsequent date such a relationship may arise. I see that the Chancellor is smiling, but I think this creates a very difficult position and that words could easily be found whereby any future business relationship which was dependent upon this particular contract might be covered, and therefore any sinister motive on the part of the person who is importing the goods might easily be covered, whereas the Clause at present covers all future relationships of any nature. I would ask the right hon. Gentleman to consider before the Report stage whether this Sub-section could not be amended in this way.


How is it possible to modify the open market price by taking account of any relations between buyer and seller? An open market price is a price ascertainable without any reference to the particular buyer or seller.

11.3 p.m.


It means that the open market price has to be dependent on certain assumptions, and this is one of them. The hon. Member for Whitechapel (Mr. Janner) has missed the point. The Commissioner, in fixing the value, has to make this assumption. It makes no difference whatever whether subsequently there is proved to have been a relationship of this kind, provided the price has not been thereby falsified.

Amendment negatived.

11.4 p.m.


I beg to move, in page 11, line 26, to leave out "get-up," and to insert "style of production or finish."

I sincerely hope my hon. Friend the Financial Secretary to the Treasury will reply to this Amendment, because I am certain that the Committee will unite on one thing, and that is on admiration of his literary skill. I want to hear his defence of the insertion of the word "get-up" in a Statute. It may seem just an incident in the word war, but it has really a bigger significance. It is important that we should put into Acts of Parliament words that have a meaning. I suggest that "get-up" has no meaning whatever. I have searched the dictionaries, and I can find no definition of it. I have searched Murray, and I find that "get-up" in certain combinations—such as "of cricket balls, to rise sharply from the pitch"—has certain meanings, but I cannot find any real meaning of the word save a colloquial meaning. I therefore turned to a judicial dictionary, and I found that while it was prepared to define almost every word one could think of, when it came to the word "get-up," it said: as to what is meant by the 'get-up of an article by the manufacturer,' see certain leading cases. I turned to the only leading case that I could find in the Library of the House of Commons, and I found that that was a case between the Dental Manufacturing Company and the firm of C. de Frey in 1912. It appeared that one firm produced the Clark Double Bowl Fountain Spittoon, and that the other firm produced the Twentieth Century Double Bowl Crystal Fountain Spittoon. It was suggested by one of the firms that the "get-up" of the second spittoon was a copy of the "get-up" of the first. After many days in Court it appeared that the judge was really unable to discover what the meaning of the word "get-up" was. I seriously suggest, therefore, that we ought not to put in the Statute—although I know that the hon. and learned Gentleman the Member for East Bristol (Sir S. Cripps) would argue that this is a legal phrase—a word which has no meaning. If my hon. Friend the Financial Secretary will tell the Committee what he means by the word "get-up," then I and 30 or 40 of my hon. Friends who put their names to this Amendment will put what he means into English instead of letting this word get into an Act.

11.7 p.m.


I am grateful to my hon. Friend for his kind references to myself, and I am sure we all appreciate his deep reverence for the English lan- guage. Unfortunately, the Finance Bill does not aim at literary grace, but rather at exact definition. I think that my hon. Friend was rather unfortunate in his inquiries in the Library, and I must say that when I read the Amendment I thought he had gone a little further than he told us he did go. He did not consult the Oxford Dictionary, which is the ultimate authority. I thought, however, that he must have consulted the Oxford Dictionary, because one of the definitions of "get-up"in that dictionary is "style of production or finish."


My hon. Friend is not correct. It is "style of production or finish especially applied to books."


That is the reason why we are unable to accept the Amendment, because, for the purposes of this Clause, it would not be so definite or clear as the word which we are using. He said that this word means nothing, but he was not very successful in his further researches into leading cases, or he would have found that in 1897 Lord Justice Chitty used the following words: The defendants have imitated what is commonly termed 'get-up'—and after all, I do not know a better term than the popular one of 'get-up.' Lord Justice Chitty in 1897 did not know a better term, and I do not know a better term for the purpose of this Clause. I can further reassure my hon. Friend, as he is one who respects authority, that this word has since occurred in reported judgments of the following judges: Lord Macnaghten, Lord Cozens Hardy, Lord Swinfen, Lord Moulton, Lord Russell of Killowen, Lord Justice Romer, and Lord Justice Vaughan Williams. All these authorities give the literary cachet which my hon. Friend would like to see. Perhaps, as Polonius said, it is "a vile phrase," but it is the best, especially in the particular context, and I am unable to accept the Amendment because I can think of no other phrase to take its place.

Amendment negatived.

Clause ordered to stand part of the Bill.

Clauses 11 to 13 ordered to stand part of the Bill.