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HQ 557683




March 3, 1994

CLA-2 CO:R:C:S 557683 WAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9811.00.69

Robert B. Silverman, Esq.
Grunfeld, Desiderio, Lebowitz & Silverman 245 Park Avenue
New York, N.Y. 10167-0002

RE: Applicability of subheading 9811.00.60, HTSUS, to mutilated footwear samples

Dear Mr. Silverman:

This is in response to your letter dated November 3, 1993, on behalf of L.A. Gear, Inc., concerning the applicability of subheading 9811.00.60, Harmonized Tariff Schedule of the United States (HTSUS), to mutilated footwear samples.

FACTS:

You state that L.A. Gear imports mutilated footwear samples under the duty-free provision for samples under subheading 9811.00.60, HTSUS. You further submit that in their condition as imported, these mutilated samples are unsuitable for sale or for use otherwise than as samples and will be used in the U.S. only for soliciting orders for products of foreign countries. L.A. Gear is contemplating a program for disposing of these samples once they are no longer needed. You state that L.A. Gear is contemplating disposing of these samples as follows:

(1) distribution of the samples to charity;

(2) exportation or sale for export to be used as samples abroad;

(3) reconstitution into useful footwear and exportation or sale for export; or

(4) exportation or sale for export to be reconstituted abroad into useful footwear.

In cases (3) and (4), reconstitution would consist of filling in the drilled-out holes, etc., which mutilated the footwear in the first place, but in either case, the footwear would not be sold in the U.S., unless reimported duty-paid.

ISSUE:

Whether under the proposed four scenarios, the mutilated footwear samples would qualify for duty-free treatment under subheading 9811.00.60, HTSUS.

LAW AND ANALYSIS:

Subheading 9811.00.60, HTSUS, provides for the free entry of samples which are either valued at less than $1 each, or marked, torn, perforated, or otherwise treated so that it is unsuitable for sale or for use otherwise than as a sample, to be used in the U.S. only for soliciting orders for products of foreign countries. The controlling factor is whether the importer uses the samples for the purpose of soliciting purchase orders of foreign made merchandise and the creation of demand for future orders.

We have previously held that samples of footwear which were imported into the U.S. for the purpose of taking orders, and after use donated to charity were eligible for duty-free treatment under subheading 9811.00.60, HTSUS. See HRL 557282 dated September 16, 1993. In HRL 557282, samples of athletic type footwear were imported into the U.S., with a stencil of the legend "SAMPLE NOT FOR RESALE" on the inside rear quarter of the footwear and also a sewn-in label on the inside quarter at the arch. After the samples were sent to the sales force, they were either destroyed or donated to charity. We held that the sample footwear in that case was eligible for duty-free entry under subheading 9811.00.60, HTSUS.

In Carson M. Simon & Co. v. United States, 46 Cust. Ct. 118, C.D. 2243 (1961), sample wallpaper books, imported from France, were distributed, unsolicited, to decorators throughout the U.S. for the purpose of obtaining orders for the wallpaper of the French manufacturer. The United States Customs Court in Carson considered the legislative history of the predecessor provision to subheading 9811.00.60, HTSUS, and concluded that sample goods must be used after importation to solicit orders for products of foreign countries. The court stated that:

". . . with respect to samples of nominal value, or so treated as to have no other use than in the solicitation of orders for merchandise, the conditions of . . . [the statute] are met, if the samples represent the goods to be ordered, and the goods have been produced in a foreign country."
Similarly, in Headquarters Ruling Letter (HRL) 553290 dated November 5, 1984, a foreign manufacturer sold wall paper sample books to an importer who sold them to dealers. The manufacturer paid the importer a commission on the sale of wallcoverings and books sold to dealers. It was held that so long as the purpose of the books was to solicit orders for foreign goods, the commission paid to the importer did not amount to a commercial enterprise in the sample books; accordingly, the wallpaper books were entitled to free entry under item 860.30, Tariff Schedules of the United States (TSUS) (the precursor to subheading 9811.00.60, HTSUS). In HRL 556219 dated December 23, 1991, lens cleaning cloths, that in some instances were sold to a distributor who sold them to retailers to give to customers as free samples for the sole purpose of soliciting orders for foreign-made standard size cloths, were not disqualified from free entry under subheading 9811.00.60, HTSUS, as samples.

These decisions are contrasted with Cosmos Shipping Company, Inc. v. United States, C.D. 4285 (1971), where a French manufacturer sold commercial size toothpaste tubes to a U.S. distributor, who in turn sold them to a retailer at a minute profit, who, in turn, packaged the tubes with other cosmetics and sold them to its customers at a price substantially less than the aggregate retail price of the cosmetics contained in the kit. The United States Customs Court held that the toothpaste tubes were not "samples" within the meaning of item 860.30, TSUS, stating that the common meaning of the word "sample" precludes the notion of a sale. Although the plaintiff argued that the "real" sales would be realized upon the reorders and the sales made by the distributor to the retailer, the court found that the transaction at issue "constitut[ed] nothing other than the introductory sale of an ordinary commercial article. . . " Id. at 283-234.

Subheading 9811.00.60, HTSUS, specifically states that one of the requirements for duty-free treatment is that the sample be "unsuitable for sale." However, the cases cited above did not preclude duty-free treatment in every instance where the article at issue was sold at one point after importation. If L.A. Gear, Inc. mutilates the samples according to the prescribed guidelines, they can hardly be deemed "ordinary commercial articles" as in Cosmos. Thus, the fact that the mutilated samples which are unsuitable for sale will be exported, does not affect eligibility for duty-free treatment under subheading 9811.00.60, HTSUS. If, however, it is known at the time of importation that the samples later may be rendered "suitable for sale" while in the U.S., we do not find that such samples meet the requirements of this statute. Therefore, the reconstitution of the footwear into footwear which is "suitable for sale" in the U.S. will preclude eligibility of the footwear for duty-free treatment under subheading 9811.00.60, HTSUS.

Provided that the district director at the port of entry is satisfied that the mutilated footwear samples are initially imported only for soliciting orders for foreign-made products, and in their condition as imported, are not suitable for sale, the footwear samples will be entitled to duty-free treatment under subheading 9811.00.60, HTSUS.

HOLDING:

Based on the information submitted, the footwear samples will not be precluded from being entered as samples under subheading 9811.00.60, HTSUS, by the fact that the importer plans to donate the samples to charity, export them for sale or reconstitution abroad or to be used as samples abroad, provided that all of the other requirements of this tariff provision are met. However, the reconstitution of the footwear into footwear which is "suitable for sale" in the U.S. will preclude eligibility of the footwear for duty-free treatment under subheading 9811.00.60, HTSUS.

Sincerely,

John Durant, Director

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