Luxury Watch Importer Says US Looking to Distract CIT From Classification Issues

Ildico, importer of luxury Richard Mille watches, told the Court of International Trade that the U.S. is seeking to "distract from the legal issue" in the case by claiming that Ildico allegedly can't prove the characteristics of the watches (Ildico v. United States, CIT # 18-00136).

Filing an opposition to the U.S. cross-motion for judgment on July 12, the importer said the government justifies its stance by saying it didn't get to look at the serial number of every watch to "confirm their importation" (see 2406040042). Ildico said the serial numbers "provide no information about the watches’ features relevant in a classification case," making the government's claim a "red herring."

Importer Ildico argues that its Richard Mille watches should be classified under Harmonized Tariff Schedule heading 9101 as watches with cases made wholly from precious metals (see 2403130063). CBP, however, liquidated the watches under heading 9102, a basket provision, after determining that the crystals attached to the back of the watches were synthetic.

Responding to the government's claims, the importer said the government simply ignored Ildico's evidence actually on the record, dismissing the company's two declarations which lay out the "nature, characteristics and features of the imported watches." The U.S. said the watches are highly stylized and that the declarations should be disregarded since the declarants don't say whether they've examined the actual 35 styles of watch at issue here, which are "identified by serial number on the commercial invoices."

Ildico again said that the U.S. failed to explain "why examination of watches with the same serial number as the commercial invoice is required," adding that there's a "low threshold for personal knowledge, especially at summary judgment." Both declarants here said their statements come from personal knowledge of the watch models and their corresponding 35 styles covered by this case.

The importer also challenged the government's claim that it's entitled to judgment due to its interpretation of Additional U.S. Note 1(b), which defines the term "cases" as embracing "inner and outer cases, containers and housings for movements, together with parts or pieces," which "serve to complete the watches." The U.S. said that if something is a part that "serves to complete" a watch, then it's "per se part of a watch."

Ildico said this reading of the note would lead to "absurd results." If the government's interpretation is followed, a watch dial and its parts would fit under the definition of "cases," yet "the Government is silent why this part is not included under" the note.

The govenrment's interpretation must also "include the indispensable part or piece included on every wrist watch -- the front watch crystal," yet the U.S. fails to include any mention of the watch crystal found on the front of the watches, the brief said. However, the government at the same time says the "synthetic sapphire found on the back of the watches is part of the 'case.'"

The U.S. can't "have it both ways," the importer argued. The government's position "is untenable since a watch crystal must be transparent for the watch user to tell the time!" Ildico wrote.

The brief also claimed that the government's interpretation of the phrase "wholly of" from Chapter 91 Legal Note 2, as only applying to watch cases of "precious metal" and not to cases of "metal clad with precious metal," is "irrational." This interpretation would mean the de minimis rule from General Note 3(h)(v)(A) doesn't apply to "any insignificant parts of cases that are of metal clad with precious metal," and "even the bezels, centers and backs of watch cases must be, e.g., 24 karat (100%) gold."

This leads to a "higher standard for cases of precious metal than of metal clad" with precious metal cases and would "void all Swiss made watches from classification under Heading 9101 because the standard for Swiss watch cases is 18k gold," the brief said.