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HQ 563524




September 13, 2006

CLA-02 RR:CTF:VS 563524 JPP

Mr. Stephen M. Zelman
Stephen M. Zelman & Associates
Attorneys at Law
888 Seventh Avenue, Suite 4500
New York, New York 10106

RE: Eligibility of Duty Exemption under HTSUS Subheading 9811.00.60 to Sample Footwear

Dear Mr. Zelman:

This is in response to your letter dated May 8, 2006, on behalf of Unisa America, Inc. (“Unisa”), requesting a ruling as to whether certain imported footwear is eligible for free entry as commercial samples under subheading 9811.00.60, Harmonized Tariff Schedule of the United States (“HTSUS”), if subsequently donated to charitable organizations.

FACTS:

You state that the merchandise consists of footwear imported by Unisa for use as samples for soliciting orders. You further submit that the footwear is marked as samples in accordance with the requirements of subheading 9811.00.60, HTSUS. After the samples are no longer needed, Unisa proposes to donate them to charitable organizations. You indicate that the charitable organizations may either give them away at no cost to the needy or sell them through their thrift shops to raise money for charity. No samples were submitted for our examination.

ISSUE:

Whether the imported footwear samples are entitled to duty-free treatment under subheading 9811.00.60, HTSUS, if subsequently donated to charitable organizations that may sell them to raise money for charity.

LAW AND ANALYSIS:

Subheading 9811.00.60, HTSUS, provides for the free entry of:

[a]ny sample . . . valued not over $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 United States only for soliciting orders for products of foreign countries.

In determining the eligibility of the sample footwear for entry under this subheading, a controlling factor is whether the importer uses the samples for the purpose of soliciting orders for foreign merchandise and the creation of demand for future orders. If the samples 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. Subheading 9811.00.60, HTSUS, is not an “actual use” tariff provision. Rather, this provision is a “suitable for use” classification provision, which requires an examination of whether the value or physical indicia of the imported samples makes them unlikely to be used for any purpose other than for the purpose of soliciting orders for foreign merchandise and the creation of demand for future orders. See Headquarters Ruling Letter (“HRL”) 559177, dated March 31, 1997.

CBP has issued several rulings concerning the methods of marking footwear used as samples. In HRL 557825, dated March 15, 1994, we held that marking footwear by embossing the sole of the shoe with the visible legend “Sample Not For Resale” in a contrasting color was sufficient to render the footwear suitable only for soliciting orders. In HRL 560231, dated March 11, 1997, we concluded that the footwear with a sewn-in label marked “SAMPLE NOT FOR RESALE” was eligible for duty-free treatment under subheading 9811.00.60, HTSUS, if the sewn-in label was placed in a location that makes the marking conspicuous. See also T.B.T. 06-002: Updated Textile Sample Guidelines, dated May 8, 2006 (Textile Book Transmittal providing general guidelines for properly marked commercial sample shipments).

In HRLs 557825 and 560231, the marking on the footwear was indicative of whether the samples were unsuitable for commercial sale or any use other than for obtaining orders for foreign merchandise. In this case, however, in the absence of a sample or a more detailed description of the subject footwear, we are unable to determine whether the subject sample footwear is marked in a manner and location that is sufficient to render the merchandise unsuitable for sale or for use other than as a sample.

We have previously held that samples of footwear imported into the United States for the purpose of taking orders and after use either destroyed or donated to charity were eligible for duty-free treatment under subheading 9811.00.60, HTSUS. In HRL 557282, dated September 16, 1993, samples of athletic type footwear were imported into the United States, 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 of 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. See also HRL 557683, dated March 3, 1994 (footwear samples entered under subheading 9811.00.60, HTSUS, and used as samples could later be disposed of by being donated to a charity, reconstituted abroad, or exported for sale or for use as samples abroad); and HRL 562780, dated September 8, 2003 (properly marked textile samples, which satisfied all of the requirements of subheading 9811.00.60, HTSUS, may be donated to charitable organizations or given away free of charge to the importer’s employees when the articles no longer are needed as samples). The above rulings did not address what happened to the samples once donated to charity.

As indicated above, subheading 9811.00.60, HTSUS, specifically states that one of the requirements for duty-free treatment is that the sample be “unsuitable for sale.” CBP has addressed the issue of a sale of a sample article at one point after importation and held that it does not necessarily preclude the article from classification within subheading 9811.00.60, HTSUS. In HRL 557013, dated March 19, 1993, mutilated clothing samples were sold by the importer to its salespeople. The importer proposed to charge its salespeople the cost of these articles for using them as samples. In that case, we held that if the importer mutilated the samples according to applicable guidelines, the samples would hardly be deemed “ordinary commercial articles,” whether or not sold for their use as samples, and thus would be eligible for duty-free treatment under subheading 9811.00.60, HTSUS. We further concluded that such sale would not disqualify the samples from entering under this duty-free provision, unless the importer’s motivation in importing and selling the articles was something other than only for soliciting orders for the foreign clothing articles. Also, in HRL 553290, dated November 5, 1994, we held that the commission paid by the foreign manufacturer to the importer of wallpaper sample books did not amount to a commercial enterprise in the sample books and the wallpaper sample books were entitled to free entry under item 860.30, Tariff Schedules of the United States (TSUS) (now 9811.00.60, HTSUS) so long as the purpose of the importation of the books was to solicit orders for foreign goods.

Consistent with the analysis set forth in HRLs 557013 and 553290, if the subject footwear is marked properly as samples within the meaning of subheading 9811.00.60, HTSUS, and the sole motivation behind their importation and distribution is the creation of demand for future orders, their sale by a charitable organization at some point subsequent to importation would not necessarily disqualify the samples from entering under this duty-free provision. As noted in HRL 557282 and HRL 557683, the samples were given away to charity and hence by this fact it can be assumed that, although marked or otherwise treated as a sample, the articles remained useful in some form and possibly could have been sold by the organization. Please note, however, that the unmarking or reconstruction of the imported sample footwear into commercial footwear (an “ordinary commercial article”) for sale in the United States would amount to a commercial enterprise and thus preclude eligibility of the footwear for duty-free treatment under subheading 9811.00.60, HTSUS. As in prior rulings, the burden of proof lies with the importer to show that all applicable requirements under subheading 9811.00.60, HTSUS are met. Also, please note that the final decision regarding eligibility for subheading 9811.00.60 treatment, HTSUS, and its marking or other treatment as a sample, is left to the discretion of the Port Director to resolve by examination of the shipment.

HOLDING:

We do not have sufficient information to determine whether the subject sample footwear is sufficiently marked so as to render the footwear suitable only as samples for soliciting orders and, thus, eligible for duty free entry under subheading 9811.00.60, HTSUS. However, assuming the footwear is appropriately marked or otherwise treated as a sample and used for soliciting orders, it is our opinion that the footwear samples will not be precluded from being entered under subheading 9811.00.60, HTSUS, by the fact that the importer plans to donate the samples to a charitable organization, which may either subsequently sell the footwear to raise money for charity or give them away to the needy.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the officer handling the transaction.

Sincerely,

Monika R. Brenner, Chief
Valuation and Special Programs Branch


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