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HQ 114562





January 7, 1999

ENT-1-RR:IT:EC 114562 GG

CATEGORY: ENTRY

Mr. Peter O'Neill
Manager, International Business
Mail Poste
2701 Riverside Drive
Suite N0184
Ottawa, Canada K1A OB1

RE: Yves Rocher Canada Mail Importations; 19 U.S.C. ?1321; 19 CFR Part 145; Inapplicability of Section 321 to Quota Class Merchandise

Dear Mr. O'Neill:

This is in response to your letter, dated November 20, 1998, requesting a ruling on the application of U.S. Customs laws to proposed mail importations by a cosmetics distributor, Yves Rocher Inc. ("Yves Rocher"). This company has come to you for advice, thus prompting your request.

FACTS:

Yves Rocher is a distributor of cosmetics. The company is diversifying its sales operations by venturing into the home sales market. It plans to have sales agents conduct informal gatherings or parties in the homes of persons in the United States. The participants at those events will be able to select items from samples carried by the sales agents or from pictures of merchandise appearing in Yves Rocher catalogues. Orders placed with the sales agents will be relayed to the Yves Rocher corporate office and distribution center in Montreal. The cosmetics will be shipped directly from Montreal by mail to the sales agents in the United States. The sales agents will then deliver the items to the purchasers.

ISSUE:

1) Whether the shipments of merchandise are eligible for the administrative exemption from duty under Section 321 of the Tariff Act of 1930, as amended.

2) Whether the shipments in question are exempt from quota restraints.

LAW AND ANALYSIS:

Section 321(a)(2)(C) of the Tariff Act of 1930, as amended, (19 U.S.C. ?1321(a)(2)(C)), provides for the duty and tax free entry of articles with an aggregate fair retail value in the country of shipment of $200 or less which are imported by one person on one day. The purpose of this provision is to minimize expense and inconvenience to the government disproportionate to the revenue that is collected. The applicable regulations for mail importations of this nature are found in sections 10.151, 10.153, 143.23(j), and 145.31 of the Customs Regulations (19 CFR

Section 10.151 provides that shipments imported by one person on one day valued at $200 or less may be entered under informal entry procedures free of duty and tax, unless there is reason to believe that the shipment is one of several lots covered by a single order or contract and that it was sent separately for the express purpose of securing free entry or of avoiding compliance with any pertinent law or regulation. Consolidated shipments addressed to one consignee shall be treated for purposes of Section 321 as one importation. (19 CFR

In the arrangement contemplated by Yves Rocher, sales agents located in the United States will receive parcels containing cosmetics ordered for individual purchasers. It is our understanding that the packages will be addressed to the sales agents, who will take care of any Customs formalities before personally delivering the cosmetics to the purchasers. The fact that the packages are sent first to the sales agents makes this a commercial, not a personal, transaction. Commercial shipments may be entered under Section 321. However, the $200 per day value limit will apply to the sales agents, not to the individual purchasers. (In contrast, the $200 per day value limit would apply to each individual purchaser if the parcels were sent directly from Canada to the individual purchasers.) This means that Section 321 may not be used if the aggregate value of the parcels received by a sales agent on a given day exceeds $200. In that case, the parcels would have to be entered under regular mail informal or formal entry procedures, depending on their value.

The contents of shipments sent by mail to persons in the United States must be declared to U.S. Customs, giving a full and accurate description of the contents and the value of the merchandise. An accompanying invoice or bill of sale containing an accurate description and the purchase price of the merchandise, should be securely attached to the outside of the package or enclosed therein. (19 CFR ?145.11.) In addition to the declaration and invoicing requirements, packages imported by mail must also usually be entered on Customs Form 3419, 368, or 7501. However, qualifying Section 321 shipments arriving in the mail may be passed free of duty and tax without the filing of an entry. (19 CFR ?145.31.) The declaration and invoice take the place of the bill of lading required of other Section 321 shipments which arrive otherwise than by mail. (19 CFR

You also inquire about the applicability of quota or visa restraints to the shipments in question. We note that the articles you describe as being the subject of these importations, i.e., cosmetics, are usually not subject to quota restrictions. However, should Yves Rocher begin to sell quota class merchandise at its home parties, then the rules governing quota merchandise would apply to the ensuing importations. One of the immediate consequences would be that otherwise qualifying parcels could no longer be entered under Section 321. This is because, pursuant to Section 10.153(g) of the Customs Regulations, the Section 321 administrative exemption from duties does not apply to commercial shipments of quota class merchandise. Note in contrast that shipments of quota merchandise under $200 in value sent directly from Canada to the ultimate purchaser for their personal consumption may be entered free of duty under Section 321. See Headquarters Ruling Letters 226254, dated November 3, 1995, and 114453, dated October 21, 1998.

In summary, the shipments sent to each sales agent by mail will qualify for Section 321 treatment if their aggregate value is $200 or less on a given day. If the aggregate value of the parcels is over $200, then all of the parcels must be entered under regular mail entry procedures, with the attendant filing of entries and the payment of duties and taxes. The shipments in question will be considered to be commercial in nature, and therefore, will be subject to all quota restrictions, including a prohibition on the use of Section 321 procedures, should the items qualify as quota class merchandise.

HOLDING:

1) The shipments of merchandise sent to each sales agent will be eligible for the Section 321 administrative exemption from duty if the aggregate value of the parcels received by each agent on a single day does not exceed $200. If the aggregate value of the parcels is over $200, then all of the parcels must be entered under regular mail entry procedures.

2) The shipments in question will be considered to be commercial in nature, and will be subject to any pertinent visa and quota restraints, including a prohibition on the use of Section 321 entry procedures, should their contents consist of quota-class merchandise.

Sincerely,

Jerry Laderberg
Chief

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