Recently foreign merchants have frequently omitted to return the transit passes taken out by them to be cancelled, and I have accordingly the honour to request you to Instruct them hereafter to give up their passes immediately the goods have arrived at their destination. Should there be no li-kin office, nor any local official Yamên at the place in question, the pass should be sent to you to be forwarded to the proper authorities so that it might be cancelled.
No inquiries will be made as to former breaches of this Rule by foreign merchants. If, however, these occur again, the Commissioner of Customs will be instructed not to issue passes in the future to firms that do not surrender them in accordance with the above Rule.
As regards the kerosene li-kin, this has now been reduced by one-half, which makes it much about the same as the full and half duty. This reduction has been made on account of my desire not to treat Chinese and foreign merchants differentially. Formerly when foreign merchants, having paid the import and transit duty, sold kerosene to Chinese merchants, a further tax of 30 cents a-case was payable. This seemed very heavy, and looked like differential treatment, but now the tax for natives and foreigners like has been reduced. Hereafter Chinese merchants must pay this two-li tax; so also il conveyed by foreign merchants under transit pass, no matter whether it be sold en route or at destination, must, in accordance with the Yamên's despatch, pay the destination tax when it reaches the hands of the Chinese dealer, and the foreign merchant must not attempt to screen him.
In communicating this information to you, I would ask you to instruct the merchants to act in accordance with the Rules bere laid down.
Your Excellency,
Inclosure 3 in No. 7.
Consul Brenan to Viceroy Fan Chung-lin.
Canton, April 19, 1898. I HAVE the honour to acknowledge the receipt of your Excellency's despatch of the 2nd instant, informing me that it had been decided by the Tsung-li Yamên that merchandize proceeding inland under transit pass might in future be sold en route before reaching the destination mentioned in the pass. Your Excellency adds that once the pass has been surrendered the goods are liable to li-kin taxation like non-transit-pass goods.
In acknowledging your Excellency's despatch, in order to prevent misconception, I think it well to state that I cannot admit that the change in the transit-pass Rules
urtails the freedom from taxation which certificated goods enjoy under Treaty.
I have, &c. (Signed) BYRON BRENAN.
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