Business Notes IMPORTS

It lacks the intrigue of the Iran arms deal, but the case of the Korean M-1 rifles has stirred a controversy on Capitol Hill just the same. Since 1984 Blue Sky Productions, a small Arlington, Va., arms dealer, has been trying to import up to 200,000 American-made M-1s that the U.S. Army shipped to South Korea during World War II and the Korean War. The company hopes to reap as much as $30 million by buying the rifles for $150 apiece and selling them to antique-gun collectors for $300. But the Treasury Department has barred the deal under the provisions of the Arms Export Control Act. In the agency's view, it is illegal -- not to mention ironic -- for a company to sell Americans guns that the U.S. gave to a foreign country.

Enter Congressman Bill Chappell, a Florida Democrat, who introduced a measure to allow importation of the M-1s. Chappell contends that a check of the rifles' serial numbers shows that they were sold, not given, to the Koreans. The Congressman said he was trying to help a business that has been victimized by an overly restrictive interpretation of the law. Democratic Senator Howard Metzenbaum of Ohio objected that Chappell's bill was "designed to help one group of people make millions."

In the end, Congress included a provision in the new budget law that permits the rifles to be imported but also gives the Administration 20 days to quash the deal. By Jan. 12 the Treasury must decide whether gun buffs can add the M-1s to their collections.