Background
Ildico Inc., the exclusive U.S. importer and distributor of Richard Mille watches, challenged Customs and Border Protection’s classification of ten Swiss-made luxury wristwatch models. The watches have 18-karat gold components and transparent synthetic-sapphire crystal windows on both their fronts and backs.
Customs determined after a 2016 audit that the watches belonged under HTSUS heading 9102, which covers wristwatches other than those of heading 9101 and carried higher duties. Ildico contended that heading 9101 applied because it covers watches with cases of precious metal. The Court of International Trade upheld Customs’ classification.
The Court’s Holding
The Federal Circuit affirmed. It held that the synthetic-sapphire crystal windows on the backs of the watches are part of the watch cases because they complete the housing that protects the watches’ internal movements. The cases therefore contain both gold and synthetic sapphire and are not “wholly of precious metal” as Chapter 91 Note 2 requires for heading 9101.
The court found it unnecessary to decide whether the rear crystal windows independently qualify as “watch glass.” Even if they do, the exclusion of watch glass from Chapter 91 for separately imported parts does not require disregarding a rear crystal window when determining whether an assembled watch’s case is wholly precious metal. Ildico’s alternative argument that synthetic sapphire is a precious stone was not preserved for review.
Key Takeaways
- A transparent rear cover that closes and protects a watch movement is part of the watch case for HTSUS classification.
- A watch case containing a significant synthetic-sapphire rear window is not wholly of precious metal.
- Arguments raised only in passing in a footnote or for the first time in a reply brief are not preserved on appeal.
Why It Matters
The decision confirms that tariff classification of complete watches turns on the functional composition of the assembled case, not solely on the metal portions of that case. Luxury-watch importers cannot obtain heading 9101 treatment where a non-precious-material rear window forms part of the protective watch housing.