Marking of Commercial Samples; Textile Labels; Quota

HQ W735047 October 19, 1993 MAR 2-05 CO:R:C:V W735047 LR CATEGORY: Marking Mr. Robert Nungary Financial Manager RVL Packaging, Inc. 6711 Valijean Avenue Van Nuys, CA 91406-5819 RE: Marking of Commercial Samples; Textile Labels; Quota Dear Mr. Nungary: This is in response to your letter dated March 3, 1993, regarding the country of origin marking of textile labels to be used as samples. Sample labels were submitted. FACTS: RVL Packaging, Inc. ("RVL") is in the business of manufacturing woven labels for apparel manufacturers. On occasion RVL's Hong Kong office sends small quantities of samples to various domestic locations. Apparel trim buyers then test the labels for durability, quality, etc. before determining if they can use them. The samples submitted are small rectangular woven polyester labels pasted onto a paperboard backing. They depict various names and intricate designs and are intended for use on apparel. The labels in question are to be used only as commercial samples and will not be resold. You provided additional information by telephone. You advised that the labels are imported in various manners: they may be imported in bulk and then mounted on cardboard backing prior to distribution to potential clients; they may be imported already mounted on the cardboard backing; or they may be imported and distributed in a sleeve containing various labels. While quantities of up to 100 samples labels may be imported together, you indicated that this is a fraction of the number that is shipped when the labels are imported for sale. You also indicated that most of the labels are valued between $.005 and $.25 cents apiece. However, on occasion, a large label may be  2 valued at $.50 - $1.00. You contend that the labels would be rendered useless if physically marked "SAMPLE-NOT TO BE RESOLD". Therefore, you request a ruling which would allow you to import the labels without such marking and still be exempt from normal quota procedures. ISSUE: Whether labels imported for use only as samples are exempt from normal quota procedures even though they are not marked "SAMPLE-NOT TO BE RESOLD". LAW AND ANALYSIS: Subheading 9811.00.60, Harmonized Tariff Schedule of the United States (HTSUS), provides for the duty-free entry of articles used as samples for the solicitation of orders for foreign merchandise provided they are valued at $1.00 or less or have been marked, torn, perforated or otherwise treated so as to render them unsuitable for any other purpose. The controlling factor is whether the importer uses the samples for the purpose of soliciting purchase orders of foreign made merchandise and the creation of demand for future orders. Articles which are classifiable under subheading 9811.00.80 HTSUS are not subject to quota restraint levels or visa requirements. You have advised us that in almost every case the individual labels are valued at $1.00 or less. In fact, you state that most of the labels are valued at a fraction of $1.00. In those cases where various labels are imported together (either mounted or unmounted), we believe that it is appropriate to look at the value of the individual labels in ascertaining their value for purposes of determining their eligibility for duty-free entry under subheading 9811.00.60. See HRL 556248, January 7, 1992 (fabric sample kit consisting of 46 swatches of fabric mounted on cards for men's suits each of which were valued under $1.00 entitled to duty free entry under subheading 9811.00.60, HTSUS). Assuming the samples are for the solicitation of orders for foreign merchandise and each label is valued at $1.00 or less, they are eligible for duty free entry even though the samples are not marked, torn, perforated or otherwise treated. Labels eligible for duty-free entry under this provision are not subject to quota. In such case, a declaration attesting to the intended use of the samples should be filed by the importer with each entry. Those labels which are valued over $1.00 and which have not been marked, torn or perforated and/or are not used to solicit purchase orders of foreign made merchandise are not entitled to duty-free entry. However, they may still be exempt from normal  3 quota procedures. Customs Directive 3500-07, February 28, 1986, established entry procedures for commercial shipment of textile and textile products, including commercial samples which are not eligible for duty free entry under 860.30, Tariff Schedules of the United States (the predecessor of 9811.00.60 HTSUS). The directive provides that such samples, valued at $250 or less, from all countries, may be entered on informal entry (including informal mail entry) provided, among other things, that the inside of the article is indelibly stamped with the word "Sample". Where the stamping of "Sample" would render the article unsuitable for use as a trade sample, fabric labels may be permanently affixed to the article. Guidelines regarding the marking and entry procedures for commercial samples were issued in 1988 and in 1989, an interim update to the directive was issued which among other things, referenced 9811.00.60 HTSUS rather than item 860.30 TSUS. No specific guidelines regarding the marking of commercial sample labels is provided. Although Customs Directive 3500-07 was rescinded on July 23, 1992, the guidelines remain in effect. It is clear that the "Marked Sample Rule" is for the purpose of ensuring that only articles which are actually to be used only as commercial samples would be exempt from normal quota procedures. In this case, we believe that neither stamping the word "Sample" nor affixing a fabric label to the labels in question is a feasible option. Since the submitted are small woven fabrics labels with intricate designs and of nominal value, we believe that the addition of such stamp or fabric label to each sample label would render it useless and/or too costly to be used as a sample to solicit orders. We note that marking "sample" on the label would obscure a portion of the labels and make it difficult evaluate their aesthetic appeal. Based on the information presented and an examination of the submitted labels, we find that as long as the district director at the port of entry is satisfied that the labels are to be used only as commercial samples and will not be otherwise sold, it is not necessary to stamp each one with the word "Sample" or attach a fabric label in order to avoid application of the normal quota procedures. The quantity of labels imported at one time, their condition at the time of importation, and the presence of a statement by the importer attesting to their intended used, are factors to be considered by the district director.  4 HOLDING: If the district director at the port of entry is satisfied that the labels in question are to be used only for commercial samples and are not for sale, they are not subject to normal quota procedures even though they are not stamped "Sample" or do not have a fabric label attached with such marking. Sincerely, John Durant, Director Commercial Rulings Division