Wristwatch Cases Broadly Defined as Parts That 'Complete the Watch,' US Tells CAFC
The Court of International Trade correctly found that importer Ildico’s watches didn't have cases made “wholly” of precious metals and that the importer was relying on too narrow a definition of "watch cases," the U.S. argued June 13 at the U.S. Court of Appeals for the Federal Circuit (Ildico Inc. v. United States, Fed. Cir. # 25-1337).
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Ildico and the U.S. battled in the trade court in a classification case, brought in 2018, that the government repeatedly characterized as dragging due to a conflict-filled discovery process (see 2401290024 and 2407170041). CIT Judge Jane Restani eventually held that the importer’s Richard Mille watches should be classified under Harmonized Tariff Schedule heading 9102, for watches without cases made wholly from precious metals, rather than heading 9101, which carried a lower duty.
The disputed watches’ cases are made with see-through synthetic sapphire on both the front and back. The transparent backs make the cases “exhibition cases,” which let customers see into the watches’ inner workings from underneath, the U.S. said in its June 13 brief.
Ildico argued that, first, watch “cases” don’t include watch glass, and, second, that glass or other see-through material on the back of a watch is properly considered watch glass. But Restani correctly disagreed, stating that the glass on the back of a case is watch glass that is part of that case, the government said. It said she explained that “the material of a component ‘is not the determining factor for whether a component is a part of the watch case.’”
Ildico was attempting to balance its argument -- that watch cases are composed of “bezel, body, and bottom” only -- “on a mélange of lexicons and Explanatory Notes,” it said. But the court doesn’t need to look to dictionary definitions of a watch case because the Harmonized Tariff Schedule already provides its own, it said.
Additional U.S. Note 1(b) defines watch cases as “inner and outer cases, containers and housings for movements,” including “any auxiliary or incidental features,” that “serve to complete the watch,” the government said. As Restani noted, the definition doesn’t mention that the cases have to be made of any particular materials, it said.
The cases of Ildico’s watches fall under this definition, it said. They are containers, composed of the synthetic sapphire glass, a back frame, a middle case and a bezel, that “serve to complete” the watches and act as containers. Notably, without the synthetic sapphire, the cases couldn’t be considered complete because they wouldn’t actually cover the watches’ backs, it said.
Ildico’s reference to “bezel, body and bottom” referenced the explanatory note to heading 9111, but the importer was actually misinterpreting the note, it claimed. The note doesn't actually provide a list of the parts of a watch case, but it does define a watch case as the part of the watch that “closes the watch on the opposite side from the glass,” it said.
“This is precisely the function of the synthetic sapphire case back on the watches at issue,” it said.
Even if both front and back glass on a watch case is considered “watch glass,” the back watch glass serves a different role than the front watch glass on Ildico’s watch cases, the U.S. argued. In particular, the glass on the back protects the watch and provides structural support, it said.
It also raised the argument that “the term ‘watch glass’ is a tariff term that suggests it covers actual glass.”
And it said that Ildico’s argument regarding the classification of other watch case components made of nonprecious metals, namely titanium screws and copper-nickel-zinc washers, was “hypothetical and without support.” The importer argued that if the screws and washers were imported separately from the watches, they would be classified as general “parts” under heading 7318, not as parts of a watch case; meaning that they shouldn’t be considered parts of a watch case during the current classification decision, either.
But the screws and washers hadn’t been imported separately, the government said, so this has no actual bearing on the actual classification of Ildico’s watches.