Lee Iacocca, chairman of the Chrysler Corporation, has never been one to hide his light under a bushel or take kindly to criticism. This week, after four years of work on the Statue of Liberty-Ellis Island restoration project, Mr. Iacocca was dismissed from his post as chairman of a citizen's commission advising the Secretary of the Interior on this work. He doesn't like the rebuff one bit, and his response has been heated enough to light Lady Liberty's torch all the way from Detroit.

Like most Americans whose ancestors entered the United States through Ellis Island, Mr. Iacocca has a special feeling for the national monument and gladly accepted an appointment in May of 1982, to head the restoration commission. When it became clear that this advisory commission was prohibited by law from raising funds from the public for the project, a separate foundation was set up for that purpose. At the request of William Clark, who was then secretary of the Interior, Mr. Iacocca also took on the chairmanship of the foundation. Now -- and the timing of this decision is unclear -- the present secretary, Donald Hodel, has decided that there is a conflict of interest in Mr. Iacocca's holding both posts, and without asking the chairman to choose between the two, has fired him from the more prestigious position.

What is this conflict, anyway? What's so improper about giving the man who has raised $233 million for the project some say in how that money is spent? Secretary Hodel says that the potential conflict was brought to his attention when two other people who served on both bodies were told by the commission's counsel that such a conflict exists, but Mr. Iacocca says he disagrees with this view. The commission charter, in fact, specifically requires at least one cross membership, and Mr. Iacocca clearly wants to fill that role.

There are undoubtedly plenty of reasons why people in Washington want Mr. Iacocca out of the limelight, but "conflict of interest" is not high on that list. He's irascible and has been known to rub people the wrong way. He strongly disagrees with a proposal to allow commercial development on Ellis Island and has run into opposition in the Interior Department on that matter. And it is rumored that he harbors political ambitions that would not be popular with potential opponents. In spite of all this, though, the Reagan administration chose him for both the commission and the foundation jobs and kept him in these positions for years. To kick him out now, just as his work is coming to fruition, is shabby treatment. Mr. Iacocca has a right to be angry on both counts.