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HQ 558911

March 10, 1995

CLA-2 CO:R:C:S 558911 DEC


TARIFF NO.: 9811.00.60

Area Director of Customs
New York Seaport Area
Six World Trade Center - Room 432
New York, New York 10048

RE: Application for Further Review and Protest No. 1001-94-104967; 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

Dear Sir:

The above-referenced protest, timely filed by the Lancaster Group, contests the duty assessment on various cosmetic, toiletry, and fragrance products under headings 3304 and 3305, Harmonized Tariff Schedule of the United States (HTSUS). It is the protestant's position that the products at issue should be classified as samples entitled to duty-free treatment pursuant to subheading 9811.00.60, HTSUS.


The protestant, Lancaster Group USA (Lancaster) is engaged in the importation, marketing, and distribution of several brand lines of cosmetic, toiletry, and fragrance products. These products are produced at various locations throughout Europe, imported into the United States, and distributed to various department stores that resell these products to their customers.

The protestant states that to establish a United States presence for their products they are dedicating 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 protestant states that they import "samples" of
their products and provide them to their department store accounts in an effort to create interest in their products and to solicit future orders. The protestant states that all the products at issue are marked with the words "demonstration", "tester", "not for sale", "free sample", or similar language.

The "samples" that Lancaster provides to the department stores are 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" (GWP) item distributed to actual purchasers of Lancaster products and marked "not for sale", "sample", or similar language.

The department stores provide these "samples" to individual shoppers in their stores. The retail price of the products which are sold remains the same whether the customer receives a "sample", samples a product from a tester or demonstration container, or receives "samples" as part of a "gift with purchase" offering.


Whether the products Lancaster provides to department stores for distribution to individual shoppers as described above constitute "samples" which are entitled to duty-free treatment under subheading 9811.00.60, HTSUS.


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 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 to be 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. 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.

Customs is satisfied that the requirements for duty-free entry as sample merchandise are satisfied in regard to all three methods of distribution in this case. The various products are offered in containers that are marked to indicate the products' function as samples, and are distributed to publicize Lancaster's products so that demand for its products is enhanced. Notwithstanding any additional incentive to purchase the protestant's commercially available products through the offering of a gift-with-purchase promotion, Customs finds that the manufacturer's fundamental objective in using the above-described "samples" is to generate demand for future orders of its products.


Based upon the information presented, we find that the products subject to this protest which are provided to department stores for distribution to individual shoppers as described above are entitled to duty-free treatment as samples under subheading 9811.00.60, HTSUS. This protest should be granted in full.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to
the mailing of the decision. Sixty days from the date of the decision 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.


John Durant

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