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It is also apparent that it is much more economical to import metals during peacetime than to do so after hostilities have broken out. It is possible that shortage of shipping space and inadequate protection of shipping lanes, at least at the beginning of a war, might dangerously limit the importation of scarce metals at any price.

The Tariff Commission advised your committee thatalthough average imports of the principal kinds of ferrous and nonferrous scrap in postwar years have been far above the 1939 levels, they have represented very smal. proportions of domestic consumption of all the major scrap metals except aluminum. In order to preclude the possibility of an adverse effect upon domestic scrap collectors and dealers in aluminum scrap the committee believes that the suspension of the import duty on aluminum scrap should not be reimposed.

As hereinafter explained, the act of March 13, 1942, as amended, would be revised to facilitate administration, in accordance with recommendations of the Treasury Department, and in furtherance of the recommendation of the Acting Secretary of Commerce thatboth ferrous and nonferrous metals in all forms, with the exception of crude shapes derived from primary, or virgin metal, should be allowed to enter free of duty when imported for remelting purposes.

I do not favor providing in this bill for the entry free of duty of primary, or virgin metals generally, because I believe that each metal should be studied separately to determine the possible effect upon the domestic economy of adrnitting it duty-free in this form, and I do not believe that a bill designed to encourage the importation of scrap should be made to apply to metals in this form.

I favor the inclusion of provisions to guarantee that metal imported as scrap will in fact be used as scrap, but only to the extent such provisions do not tend substantially to discourage the importation of scrap.

EXPLANATION OF THE BILL

As amended by the bill, section 1 of the act of March 13, 1942, would broadly define the term "scrap" in order to achieve the objectives stated above and at the same time to adhere as closely as possible to the concept of scrap accepted by the industry. That law contains no definition of nonferrous scrap. It defined ferrous scrap as “secondhand or waste or refuse iron or steel fit only to be remanufactured” (par. 301 of the Tariff Act of 1930, 19 U. S. C. 1001, par 301). The bill would make more specific the exemption from duty of articles which are fit only to be remanufactured because of having become obsolete, defective, or damaged.

For example, under the definition of scrap steel, it is understood that the Treasury Department has followed the practice of admitting free of duty as "refuse” such articles as Japanese armor-plate ingots. Such ingots are deemed to be "fit only to be remanufactured" because their peculiar composition makes them unfit for use in the United States in their present form. The proposed section 1 (b) is intended to provide a more specific legislative basis for classifying these and similar articles as “scrap."

Section 2 of the act of March 13, 1942, as added by the bill, would also allow the admission free of duty of certain articles technically not included in the definition of scrap contained in section 1 (b). The criterion for exemption from duty is the use of the articles in question in remanufacture by melting. Entry free of duty and import tax is granted only upon submission of proof, under regulations prescribed by the Secretary of the Treasury, that such articles have been imported for, and have been used in, remanufacture by melting. Section 2, therefore, would allow the admission of articles, such as surplus war materials which are new, undamaged and not obsolete, if they are imported for, and are used only for, remelting purposes. Since there is a guaranty that such articles are to be used only in remanufacture by melting, they would not compete with domestic industry to any greater extent than would articles that fall within the definition of scrap under section 1 (b).

Specifically excluded from entry free of duty under section 2 are ores and concentrates and crude metal, except scrap. No primary or virgin metal is entitled to free entry under this bill.

Section 3 of the act of March 13, 1942, as added by the bill, would prohibit the free entry under the act of any article of which aluminum is the component material of chief value.

The amendment made by the bill would be effective as to merchandise entered, or withdrawn from warehouse, for consumption on or after the day following the date of the enactment; and, also, merchandise entered, or withdrawn from warehouse, for consumption on or before the date of enactment where the liquidation of the entry or withdrawal covering the merchandise, or the exaction or decision relating to the rate of duty applicable to the merchandise, has not become final by reason of section 514 of the Tariff Act of 1930, relating to protests against collector's decision.

CHANGES IN EXISTING LAW

In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as introduced, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, existing law in which no change is proposed is shown in roman): AN AOT To suspend the effectiveness during the existing national emergency of tariff duties on scrap

iron, scrap steel, and non-ferrous-metal scrap Be ut enacted by the Senate and House of Representatives of the United States of America in Congress assembled, [That no duties or import taxes shall be levied, collected, or payable under the Tariff Act of 1930, as amended, or under section 3425 of the Internal Revenue Code, with respect to scrap iron, scrap steel, as defined in paragraph 301 of the Tariff Act of 1930 (U. S. C., title 19, sec. 1001, par. 301), relaying and rerolling rails, or nonferrous-metal scrap entered for consumption or withdrawn from warehouse for consumption during the period beginning with the day following the date of enactment of this Act and ending with the close of June 30, 1949.)

Sec. 1. (a) No duties or import taxes shall be levied, collected, or payable under the Tariff Act of 1990, as amended, or under section 3425 of the Internal Revenue Code with respect to metal scrap, or relaying and rerolling rails.

(6) The word "scrap, as used in this Act, shall mean all ferrous and nonferrous materials and articles, of which ferrous or nonferrous metal is the component material of chief value, which are second-hand or waste or refuse, or are obsolete, defective or damaged, and which are fit only to be remanufactured.

Sec. 2. Articles of which metal is the component material of chief value, other than ores or concentrates or crude metal, imported to be used in remanufacture by melting, shall be accorded entry free of duty and import tax, upon subinission of proof, under such regulations and within such time as the Secretary of the Treasury may prescribe, that they have been used in remanufacture by milling: Provided, however, That nothing contained in the provisions of this section shall be construed to limit or restrict the exemption granted by section 1 of this Act.

It is also apparent that it is much more economical to import metals during peacetime than to do so after hostilities have broken out. It is possible that shortage of shipping space and inadequate protection of shipping lanes, at least at the beginning of a war, might dangerously limit the importation of scarce metals at any price.

The Tariff Commission advised your committee thatalthough average imports of the principal kinds of ferrous and nonferrous scrap in postwar years have been far above the 1939 levels, they have represented very smal. proportions of domestic consumption of all the major scrap metals except aluminum. In order to preclude the possibility of an adverse effect upon domestic scrap collectors and dealers in aluminum scrap the committee believes that the suspension of the import duty on aluminum scrap should not be reimposed.

As hereinafter explained, the act of March 13, 1942, as amended, would be revised to facilitate administration, in accordance with recommendations of the Treasury Department, and in furtherance of the recommendation of the Acting Secretary of Commerce thatboth ferrous and nonferrous metals in all forms, with the exception of crude shapes derived from primary, or virgin metal, should be allowed to enter free of duty when imported for remelting purposes.

I do not favor providing in this bill for the entry free of duty of primary, or virgin metals generally, because I believe that each metal should be studied separately to determine the possible effect upon the domestic economy of admitting it duty-free in this form, and I do not believe that a bill designed to encourage the importation of scrap should be made to apply to metals in this form.

I favor the inclusion of provisions to guarantee that metal imported as scrap will in fact be used as scrap, but only to the extent that such provisions do not tend substantially to discourage the importation of scrap.

EXPLANATION OF THE BILL

As amended by the bill, section 1 of the act of March 13, 1942, would broadly define the term "scrap" in order to achieve the objectives stated above and at the same time to adhere as closely as possible to the concept of scrap accepted by the industry. That law contains no definition of nonferrous scrap. It defined ferrous scrap as “secondhand or waste or refuse iron or steel fit only to be remanufactured" (par. 301 of the Tariff Act of 1930, 19 U. S. C. 1001, par 301). The bill would make more specific the exemption from duty of articles which are fit only to be remanufactured because of having become obsolete, defective, or damaged.

For example, under the definition of scrap steel, it is understood that the Treasury Department has followed the practice of admitting free of duty as "refuse” such articles as Japanese armor-plate ingots. Such ingots are deemed to be "fit only to be remanufactured" because their peculiar composition makes them unfit for use in the United States in their present form. The proposed section 1 (b) is intended to provide a more specific legislative basis for classifying these and similar articles as "scrap."

Section 2 of the act of March 13, 1942, as added by the bill, would also allow the admission free of duty of certain articles technically not included in the definition of scrap contained in section 1 (b). The criterion for exemption from duty is the use of the articles in question in remanufacture by melting. Entry free of duty and import tax is granted only upon submission of proof, under regulations prescribed by the Secretary of the Treasury, that such articles have been imported for, and have been used in, remanufacture by melting. Section 2, therefore, would allow the admission of articles, such as surplus war materials which are new, undamaged and not obsolete, if they are imported for, and are used only for, remelting purposes. Since there is a guaranty that such articles are to be used only in remanufacture by melting, they would not compete with domestic industry to any greater extent than would articles that fall within the definition of scrap under section 1 (b).

Specifically excluded from entry free of duty under section 2 are ores and concentrates and crude metal, except scrap. No primary or virgin metal is entitled to free entry under this bill.

Section 3 of the act of March 13, 1942, as added by the bill, would probibit the free entry under the act of any article of which aluminum is the component material of chief value.

The amendment made by the bill would be effective as to merchandise entered, or withdrawn from warehouse, for consumption on or after the day following the date of the enactment; and, also, merchandise entered, or withdrawn from warehouse, for consumption on or before the date of enactment where the liquidation of the entry or withdrawal covering the merchandise, or the exaction or decision relating to the rate of duty applicable to the merchandise, has not become final by reason of section 514 of the Tariff Act of 1930, relating to protests against collector's decision.

CHANGES IN EXISTING LAW

In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as introduced, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, existing law in which no change is proposed is shown in roman): AN AOT To suspend the effectiveness during the existing national emergency of tariff duties on scrap

iron, scrap steel, and non-ferrous-metal scrap Be u enacted by the Senate and House of Representatives of the United States of America in Congress assembled, [That no duties or import taxes shall be levied, collected, or payable under the Tariff Act of 1930, as amended, or under section 3425 of the Internal Revenue Code, with respect to scrap iron, scrap steel, as defined in paragraph 301 of the Tariff Act of 1930 (U. S. C., title 19, sec. 1001, par. 301), relaying, and rerolling rails, or nonferrous-metal scrap entered for consumption or withdrawn from warehouse for consumption during the period beginning with the day following the date of enactment of this Act and ending with the close of June 30, 1949.]

Sec. 1. (a) No duties or import taxes shall be levied, collected, or payable under the Tariff Act of 1930, as amended, or under section 3425 of the Internal Revenue Code with respect to metal scrap, or relaying and rerolling rails.

(6) The word "scrap", as used in this Act, shall mean all ferrous and nonferrous materials and articles, of which ferrous or nonferrous metal is the component material of chief value, which are second-hand or waste or refuse, or are obsolete, defective or damaged, and which are fit only to be remanufactured.

Sec. 2. Articles of which metal is the component material of chief value, other than ones or concentrales or crude metal, imported to be used in remanufacture by melting, shall be accorded entry free of duty and import tax, upon submission of proof, under such regulations and within such time as the Secretary of the Treasury may prescribe, that they have been used in remanufacture by milting: Provided, however, That nothing contained in the provisions of this section shall be construed to limit or restrict the exemption granted by section 1 of this Act.

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