CLA-2 CO:R:C:S 957226 DEC
Ms. Mary E. Gill
AT&T Corporation
Law Department
Guilford Center 1-3A10
5420 Millstream Road
Greensboro, North Carolina 27420
RE: Digital cordless telephone display units; HRL 555552; United
States v. London
Records, Inc.; Italian Drug Importing Co. v. United States
Dear Ms. Gill:
This is in response to your letter dated October 11, 1994,
in which you seek a ruling on whether certain digital cordless
telephone display units are classified under subheading
9811.00.60, Harmonized Tariff Schedule of the United States
(HTSUS).
FACTS:
The AT&T Corporation (AT&T) intends to import cordless
telephone display units from China for use in AT&T Phone Center
stores. Each display cordless telephone set consists of the
plastic housing, buttons, and external markings of an actual
digital cordless telephone without the internal operational
components. The telephone housing is weighted internally to
simulate the actual weight of the completed cordless telephone.
You indicate in your submission that while the unit in question
may consist of an actual cordless telephone housing, plug
receptacles, and buttons, its value is approximately one-tenth of
the retail price of the completed cordless telephone set. These
units are imported as display units for AT&T Phone Center stores
because operational telephones are frequently stolen from retail
stores and AT&T has found it to be commercially impractical to
continue to incur these losses from theft.
ISSUE:
Whether the cordless telephone display units, as described
above, are entitled to duty-free treatment under subheading
9811.00.60, HTSUS, when imported into the United States.
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 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 Headquarters Ruling Letter (HRL) 555552, dated August 10,
1990, Customs determined that non-quota footwear imported for
sample use may either have a 1/4-inch hole drilled in each sole
or a label with the words "Sample-Not-For-Resale" permanently
attached to a readily visible place in order to qualify for free
entry under subheading 9811.00.60, HTSUS, provided the district
director is satisfied that such treatment renders the shoes
unsuitable for use for any purpose other than soliciting orders
for foreign merchandise.
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 as samples. The goods in this 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.
Similarly, the cordless telephone display units that AT&T
intends to use as samples in the AT&T Phone Center stores must be
marked to indicate that the are samples and not for sale. In
addition, duty-free entry under subheading 9811.00.60, HTSUS, is
granted to articles that are distributed to generate demand for
future orders of the foreign-produced products. We are satisfied
that the display units as described are used to solicit orders
for foreign merchandise.
HOLDING:
If the display units are marked "sample - not for sale",
Customs has no objection to allowing the items duty-free entry
pursuant to the requirements of subheading 9811.00.60, HTSUS.
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is entered. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer.
Sincerely,
John Durant
Director, Commercial Rulings
Division