CLA-2 RR:TC:SM 559549 MLR
Port Director
U.S. Customs Service
P.O. 9516
El Paso, TX 79985
RE: Internal Advice; Applicability of duty exemption under HTSUS
subheading 9811.00.60 to ceramic tile; Mexico; boards;
sample
Dear Sir:
This is in reference to your memorandum dated September 28,
1995, forwarding a request for internal advice filed by Rudolph
Miles & Sons Inc. ("Rudolph Miles"), on behalf of American Olean
Tile Company ("AOTC"), concerning the applicability of subheading
9811.00.60, Harmonized Tariff Schedule of the United States
(HTSUS) to ceramic tiles. Photocopies of the tiles mounted on
boards were submitted.
FACTS:
Your office states that the ceramic tile entered by AOTC was
allegedly for use solely as samples in taking orders. Rudolph
Miles states that Mexican ceramic tile, glazed, and valued at
less than $1.00 each, were imported from Mexico as samples
(either board mounted or in boxes). The record includes a letter
from John A. Steer Co., Customs Brokers, requesting a ruling from
New York concerning tiles imported by AOTC. This letter states
that tiles from Spain, Italy, Brazil, and Mexico are imported as
samples for soliciting orders for merchandise, and that some of
the tiles will be mounted on boards after importation, or will be
used "as is" by salesmen. It is stated that AOTC's business
requires large quantities of samples (either board-mounted or
otherwise) because of its large volume of sales. The tiles are
provided to AOTC's retailers and distributors for display in
order to entice buyers to purchase AOTC's products. The letter
also states that AOTC maintains a "sample department;" that AOTC
receives the tiles in various sizes of shipments, including full
container- or truck-load quantities; and that each order for
samples is covered by an AOTC purchase order marked: "Samples."
Some of the vendors supply the tiles free of charge or at reduced
cost, and in such instances, it is stated that the fair market
value of the tiles as well as the price to be paid is provided.
It is stated that when the tiles are supplied at no charge or at
reduced costs, the invoices and shipping documents indicate that
the tiles are "samples." Furthermore, the letter indicates that
in the rare instances when the tiles have a fair market value
greater than $1.00, they are entered under heading 6908, HTSUS.
The letter also states that AOTC routes all of the sample
shipments to its sample department and fully segregates them from
normal distribution channels. Once in the sample department, the
tiles are cut and mounted on sample boards, whereas some are used
in the condition received.
The record includes an AOTC purchase order for 7384 tiles
(568 cartons), in four different styles. The purchase order is
marked "samples" and "please mark: for sample boards." The
Spanish invoice for this purchase order states
"muestras//samples" and "without commercial value," but a
"statistic value only" in the amount of $1741.24 is provided.
The tiles covered by this invoice are entered under subheading
9811.00.60, HTSUS.
The record also includes an AOTC purchase order for Mexican
tiles with no indication that they should be samples. The tiles
for the corresponding invoice indicates that 810 tiles were
imported at a base price ranging from $3.92 to $4.25. These
tiles were entered under subheading 6908.90.00, HTSUS. The
record also contains an AOTC purchase order for Mexican tiles,
which states "subtle steps stone sample material" and "samples of
no commercial value." The corresponding invoice shows that the
tiles have a base price of $4.25, and they were entered under
subheading 6908.90.00, HTSUS.
ISSUE:
Whether the ceramic tiles are entitled to duty-free
treatment under subheading 9811.00.60, HTSUS.
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.
The controlling factor is whether the importer uses the samples
for the purpose of soliciting purchase orders for foreign
merchandise and the creation of demand for future orders. With
respect to the ceramic tiles from Mexico, section 181.62, Customs
Regulations (19 CFR 181.62), provides that commercial samples of
negligible value may be imported duty-free from Canada or Mexico
under subheading 9811.00.60, HTSUS, if they are imported solely
for the purpose of soliciting orders for foreign goods, and if
valued over $1.00, are properly marked, torn, perforated or
otherwise treated prior to arrival in the U.S. so that they are
unsuitable for sale or for use except as commercial samples.
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 wallpapers of the
French manufacturer. Some of the recipients remitted payment for
the books. The U.S. Government contended that the language of
paragraph 1821(a) of the Tariff Act of 1930, as added by Public
Law 85-211 (the predecessor provision of subheading 9811.00.60,
HTSUS), was confined to samples directly related to the
solicitation of orders from foreign manufacturers, for the
purpose of expanding international trade; therefore, where an
American concern purchased samples from abroad for distribution
to its potential U.S. customers, paragraph 1821 would not apply.
The United States Customs Court, in considering the
legislative history of this provision, 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.
Consequently, it was held that there is no statutory requirement
of foreign ownership of the samples, nor did the legislative
background of the provision reveal a congressional intent to so
limit the terms of the pertinent provisions.
In Headquarters Ruling Letter (HRL) 557584 dated March 21,
1994, Customs held that certain pharmaceutical products were
entitled to free entry under subheading 9811.00.60, HTSUS, if
valued at $1.00 or less, and they are only used as samples for
soliciting orders for products of foreign countries. However, in
the instances where the value was greater than $1.00, only those
products with markings which included the words "sample - not for
sale" were eligible for duty-free treatment under this provision.
In this case, it is stated that the tiles are distributed to
AOTC's retailers and distributors for display to entice customers
to purchase AOTC's tiles. In the case of the tiles imported from
Spain, we are satisfied that they qualify for duty-free entry
under subheading 9811.00.60, HTSUS, as long as the tiles are only
used to solicit orders for foreign merchandise. The AOTC
purchase order indicates that the order is for samples. The
Spanish invoice also indicates that the tiles are samples, and
7384 tiles were imported at a value of $1,741, which indicates
that the tiles individually are valued at less than $1.00.
In the case of the tiles imported from Mexico, while some of
the AOTC purchase orders indicate that the order is for samples,
the Mexican invoices do not indicate that the tiles are samples.
The fact that the invoices do not indicate that the tiles are
samples does not necessarily disqualify them from entry under
subheading 9811.00.60, HTSUS, if AOTC shows that the tiles will
only be used to solicit orders for foreign merchandise, and the
tiles individually are valued at $1.00 or less, or are marked or
otherwise treated so that the tiles are unsuitable for sale or
for use otherwise than as a sample. However, with respect to the
tiles from Mexico, the record only includes examples of tiles
which individually are valued at more than $1.00, and no evidence
is presented to show that they are marked as samples or otherwise
treated to render them unsuitable for sale or any use other than
as samples for obtaining orders for similar merchandise.
Furthermore, although AOTC states that some of the tiles may be
mounted on boards in their sample department in Pennsylvania, in
order to qualify for duty-free treatment under subheading
9811.0060, HTSUS, the tiles must be marked as samples or be
mounted on boards at the time of entry if they are valued
individually at more than $1.00.
HOLDING:
Based on the information submitted, the ceramic tiles valued
at $1.00 or less, for which the AOTC purchase order indicates
that they are "samples," may be entered duty-free under
subheading 9811.00.60, HTSUS, if AOTC only uses them as samples
for soliciting orders for similar merchandise from foreign
countries. In order for the ceramic tiles valued at more than
$1.00 to qualify for entry under subheading 9811.00.60, HTSUS,
the tiles must be marked as samples or otherwise treated to
render them unsuitable for sale or any use other than as samples
for obtaining orders for similar merchandise at the time of
entry.
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, Freedom of Information Act
and other public access channels.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division