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HQ 558969




April 21, 1995

CLA-2-R:C:S 558969 DEC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9811.00.60

Area Director
U.S. Customs
J.F.K. Airport, Building 77
Jamaica, New York 11430

RE: Internal Advice 60/94; samples of cosmetic products; United States v. London Records, Inc., 402 F.2d 1009, 56, C.C.P.A. 14 (1968); Italian Drug Importing Co. v. United States, 46 Cust. Ct. 243, C.D. 2263; HRL 558911

Dear Sir:

This is in response to the above-referenced request for Internal Advice, initiated by counsel for Christian Dior Perfumes, Incorporated, by letter dated August 26, 1994, regarding the eligibility of sample perfume products for subheading 9811.00.60, Harmonized Tariff Schedule of the United States (HTSUS), duty-free treatment.

FACTS:

Christian Dior Perfumes, Incorporated (Christian Dior), imports five milliliter (ml) glass perfume bottle samples of "Dune Eau De Toilette" from France. With respect to the distribution of the samples after importation, counsel for Christian Dior has advised Customs of the following information. The perfume samples are packaged and distributed in a cardboard carton marked "NOT FOR SALE" on the bottom panel and are offered and distributed free of charge to potential customers. The distribution occurs in one of the following two ways: (1) interested individuals may place their name and address on a written register located at a Christian Dior perfume counter in retail stores and the company will mail a complimentary sample of the article without charge, or (2) an individual is given a complimentary sample free of charge when purchasing a Christian Dior perfume product (gift-with-purchase), the retail price of which is unaffected by the complimentary sample.

Counsel also states that the perfume sample is not a promotional sales item offered at a discount. According to counsel, the "sample" is provided free of charge, it is a promotional size (much smaller than the commercial size product), and is not authorized to be offered for sale at any level in the chain of distribution.

It is your position that in order to qualify for classification under subheading 9811.00.60, HTSUS, the articles must be distributed to their targeted audience in "a free and unfettered manner." Any intermediate step such as a mailing or additional purchase that is between the offering of a sample and the potential customer should preclude classification under subheading 9811.00.60, HTSUS.

ISSUE:

Whether the perfume products that Christian Dior provides to individuals in the manner described above are entitled to duty-free treatment under subheading 9811.00.60, HTSUS.

LAW AND ANALYSIS:

Subheading 9811.00.60, HTSUS, provides for the duty-free treatment of any sample either valued at less than $1 each or marked, torn, perforated, or otherwise treated so that it is unsuitable 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 for foreign merchandise represented by the samples and the creation of demand for future orders. If the items at issue are valued at more than $1 each, they may not be entered free of duty under this tariff provision unless they are marked as samples or treated in some way to render them unsuitable for commercial sale or any use other than as samples for obtaining orders for similar articles.

In United States v. London Records, Inc., 402 F.2d 1009, 56 C.C.P.A. 14 (1968), sample records with a label stating "Made in England - Not For Sale" were distributed throughout the United States to record reviewers and radio stations free of charge to generate demand for the music. The court held that these articles were entitled to duty-free entry as sample merchandise. In reaching this conclusion, the London Records court cited Italian Drug Importing Co. v. United States, 46 Cust. Ct. 243, C.D. 2263, which held that samples of vitamins distributed to doctors who gave them to their patients qualified for duty-free treatment as samples. The goods in the Italian Drug case were marked "Sample, not for sale." "The court observed that notwithstanding the fact that a temporary benefit was derived by the patients to whom the vitamins were distributed free of charge, the importations were . . . based upon the object of securing future orders . . .." London Records, 402 F.2d at 1011, 56 C.C.P.A. at 17. In addition, the court stated that

The radio stations and disc jockeys were no more than a link in the "chain of solicitation." We view their role, as did the court below, "as incidental and wholly subordinate to what plainly appears as the sole motivating purposes behind the importation and distribution of the samples - creation of demand for future orders."

Id., 56 C.C.P.A. at 18.

In Headquarters Ruling Letter (HRL) 558911, dated March 10, 1995, Customs addressed an issue similar to that presented here. HRL 558911 involved an importer engaged in the importation, marketing, and distribution of several brand lines of cosmetic, toiletry, and fragrance products. In order to establish a United States presence for their products, the importer dedicated a significant amount of resources to advertising and marketing their products to the department stores who sell their products as well as to the public. As part of this program, the importer provided "samples" of their products to their department store accounts in an effort to create interest in their products and to solicit future orders. In this case, all the products at issue were marked with the words "demonstration", "tester", "not for sale", "free sample", or similar language.

The "samples" that were provided to the department stores were packaged and marked in the following manner:

1. packaged in full-sized containers available for testing and demonstration at the retail counter and marked "tester/demonstration",

2. packaged in small packages such as tubes, sachets, and bottles for distribution to individuals and marked "not for sale", "sample", or similar language, or

3. packaged in small packages such as tubes, sachets and bottles that are part of a "gift-with-purchase" item distributed to actual purchasers of other products and marked "not for sale", "sample", or similar language.

The department stores would provide these "samples" to individual shoppers in their stores. The retail price of the other products remained the same whether or not the customer received a "sample", sampled a product from a tester or demonstration container, or received "samples" as part of a "gift with purchase" offering. Customs concluded that the articles distributed in each of these scenarios were properly classified as samples pursuant to 9811.00.60, HTSUS, and entitled to duty-free treatment.

In regard to the instant case, Customs is satisfied that the requirements for duty-free entry as sample merchandise are satisfied in regard to both methods of distribution. The sample perfume product is offered in containers that are marked to indicate that the products are samples and are not for sale and is distributed to stimulate consumer interest and create future demand in Christian Dior's products. There is no evidence that the retail prices of the commercially available products either increased under the "gift-with-purchase" offering or decreased when no such offering is made. Therefore, notwithstanding any possible incentive to purchase the importer's commercially available products through the gift-with-purchase promotion, Customs finds that, consistent with HRL 558911, Christian Dior's fundamental objective in importing the above-described "samples" is to generate demand for future orders for the products represented by these samples.

HOLDING:

Based upon the information presented and consistent with HRL 558911, we find that the 5 ml samples of Christian Dior perfume imported and distributed under the circumstances described above are entitled to duty-free treatment as samples under subheading 9811.00.60, HTSUS.

This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, LEXIS, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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