OT:RR:CTF:CPM H285165 RGR
Port Director
U.S. Customs and Border Protection
Los Angeles International Airport
11099 South La Cienega Blvd.
Los Angeles, CA 90045
Attn: L.M. Jimenez, Senior Import Specialist
RE: Application for Further Review of Protest No. 2720-17-101444; Tariff Classification of Richard Mille RM011 (MON-00007) Automatic BIV Red Gold Watch from Switzerland
Dear Port Director:
The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 2720-17-101444, timely filed on January 3, 2017, on behalf of Ildico Inc. (“Protestant”), concerning classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of one entry of a Richard Mille RM011 (MON-00007) Automatic BIV Red Gold Watch from Switzerland. A meeting between counsel for Protestant and members of my staff was held at our office on July 13, 2017. This decision takes into account arguments made during that meeting and presented by counsel in a supplemental submission dated September 29, 2017.
FACTS:
The protested merchandise consists of one entry of a Richard Mille RM011 (MON-00007) Automatic BIV Red Gold Watch (“Richard Mille watch”) from Switzerland. The Richard Mille watch is mechanical and self-winding, with more than 17 jewels in the movement. It consists of synthetic sapphire crystal, an 18k red gold bezel, an 18k red gold case with a synthetic sapphire back, and a rubber strap.
In watches, the term “crystal” refers to the clear cover that goes over the dial and protects it from dirt, debris, and water. There are three main types of crystals used in watchmaking: synthetic sapphire, mineral, and acrylic. Highly processed synthetic sapphire, the most expensive type, is preferred and used in Swiss-made watches because it is durable and scratch resistant. The term “bezel” is defined in the Explanatory Notes (“ENs”) of the Harmonized Commodity Description and Coding System as “the part which holds the glass.” EN to heading 91.11, EN (B)(4). According to additional U.S. Note 1(b) to Chapter 91, HTSUS:
[t]he term “cases” embraces inner and outer cases, containers and housings for movements, together with parts or pieces, such as, but not limited to, rings, feet, posts, bases and outer frames, and any auxiliary or incidental features, which (with appropriate movements) serve to complete the watches, clocks, time switches and other apparatus provided for in this chapter.
According to the Protestant, Ildico was instructed by CBP at the Port of Los Angeles to enter the watch at issue on August 25, 2017 under subheading 9102.21.90, HTSUS, which provides for “[w]rist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: [o]ther wrist watches, whether or not incorporating a stop watch facility: [w]ith automatic winding: [h]aving over 17 jewels in the movement: [o]ther.” On July 8, 2016, the entry was liquidated in heading 9102, specifically subheading 9102.21.90, which provides for “[w]rist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: [o]ther wrist watches, whether or not incorporating a stop watch facility: [w]ith automatic winding: [h]aving over 17 jewels in the movement: [o]ther.”
Protestant filed this Protest and AFR on January 4, 2017. Protestant asserts that the subject entry, specifically the watch movement and case, should have been classified under subheading 9101.21.50, HTSUS, as “[w]rist watches, pocket watches and other watches, including stop watches, with case of precious metal or of metal clad with precious metal: [o]ther wrist watches, whether or not incorporating a stop watch facility: [w]ith automatic winding: [h]aving over 17 jewels in the movement: [o]ther,” which are duty free. In addition, Protestant asserts that the rubber watch strap should be classified separately under subheading 9101.21.30, HTSUS, as “[w]rist watches, pocket watches and other watches, including stop watches, with case of precious metal or of metal clad with precious metal: [o]ther wrist watches, whether or not incorporating a stop watch facility: [w]ith automatic winding: [h]aving over 17 jewels in the movement: [s]traps, bands or bracelets entered with watches of subheading 9101.21.50 and classifiable therewith pursuant to additional U.S. note 2 to this chapter; all the foregoing whether or not attached to such watches at the time of entry: [o]ther.”
ISSUE:
Whether the Richard Mille RM011 (MON-00007) Automatic BIV Red Gold Watch is classified as two separate articles, specifically a watch with a case of precious metal under subheading 9101.21.50, HTSUS, and a strap under subheading 9101.21.30, HTSUS, or is instead classified as a single watch as “other than those of heading 9101” under subheading 9102.21.90, HTSUS.
LAW AND ANALYSIS:
The protest was properly filed as a decision on classification under 19 U.S.C. § 1514(a)(2). The protest was timely filed on January 4, 2018, within 180 days of liquidation on July 8, 2016. See 19 U.S.C. § 1514(c)(3).
Further Review of Protest No. 2720-17-101444 was properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a). Specifically, Protestant alleges that the decision against which the protest was filed is inconsistent with New York Ruling Letter (“NY”) B87955, NY B88308, and NY B87974, all dated August 19, 1997. Accordingly, because the decision against which this protest was filed is alleged to be inconsistent with rulings of the Commissioner of Customs or his designee, we find that further review of Protest No. 2720-17-101444 is warranted.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
9101 Wrist watches, pocket watches and other watches, including stop watches, with
case of precious metal or of metal clad with precious metal:
Other wrist watches, whether or not incorporating a stop watch facility:
9101.21 With automatic winding:
Having over 17 jewels in the movement:
Straps, bands or bracelets entered with watches of
subheading 9101.21.50 and classifiable therewith pursuant to additional U.S. note 2 to this chapter; all the foregoing whether or not attached to such watches at the time of entry:
9101.21.30 Other…
9101.21.50 Other…
***
9102 Wrist watches, pocket watches and other watches, including stop watches, other
than those of heading 9101:
Other wrist watches, whether or not incorporating a stop watch facility:
9102.21 With automatic winding:
Having over 17 jewels in the movement:
9102.21.90 Other…
***
Note 2 to Chapter 91 provides the following:
Heading 9101 covers only watches with cases wholly of precious metal or of metal clad with precious metal, or of the same materials combined with natural or cultured pearls, or precious or semiprecious stones (natural, synthetic or reconstructed) of headings 7101 to 7104. Watches with case of base metal inlaid with precious metal fall in heading 9102.
In interpreting the HTSUS, the Explanatory Notes (“ENs”) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The ENs to 91.01 provide:
In accordance with Note 2 to this Chapter, watches of this heading must have cases wholly of precious metal or of metal clad with precious metal. They may be set with gem stones or with natural or cultured pearls and may be fitted with a cover or have a bracelet of precious metal.
The watches contained in the protested entries consist of a crystal, made of highly processed synthetic sapphire. In addition, another clear synthetic sapphire piece is mounted into the case back such that it cannot be separated from the gold portion of the case back. The synthetic sapphire mounting allows one to see the movement from the outside. As integrated into the case, it holds and protects the movement along with the gold portion of the case. Thus, the case is not entirely of precious metal or metal clad of precious metal. Therefore, the Richard Mille watch does not satisfy the requirements of Note 2 to Chapter 91. Accordingly, it is classified in heading 9102, which provides for “[w]rist watches . . . other than those of heading 9101.”
Protestant argues that the watches satisfy note 2 to Chapter 91 for classification in heading 9101 because the case is of precious metal combined with “precious or semiprecious stones (natural, synthetic or reconstructed) of headings 7101 to 7104.” In support of its argument, the Protestant provides various dictionary definitions of the terms “combined with” and “set” as stated in Note 2 to Chapter 91 and the EN to 91.01. However, the reference to precious and semiprecious stones of headings 7101 to 7104 refers to watches that are embellished with pearls or jewels of headings 7101 to 7104 for purposes of ornamentation. Here, the term “crystal” does not refer to a precious stone, even when made of synthetic sapphire. Rather, it refers to the part of the watch that covers the dial. It is used in the subject watch because it is extremely hard and scratch-resistant. Synthetic sapphire crystals that protect the dial, or synthetic sapphire pieces mounted into the case, are not synthetic or reconstructed precious stones of heading 7104, HTSUS, at all. See Headquarters Ruling Letter (“HQ”) 967923, dated January 13, 2006.
In HQ 967923, the sapphire wafers at issue were created by elongating a synthetic sapphire seed crystal from alumina into a boule. The sapphire crystal is cut into wafers to make a substrate for a diode. Accordingly, we determined that the sapphire wafers had been advanced beyond the condition of synthetic sapphires into articles of sapphires, such that they were classified in heading 7116, HTSUS, instead of heading 7103, HTSUS. Likewise, the synthetic sapphire portion of the case back of the instant merchandise has been processed beyond synthetic sapphire described in headings 7104. Thus, it is not a precious or semiprecious stone of headings 7104. Therefore, Note 2 to Chapter 91 does not apply.
Protestant also argues that CBP’s classification of the Richard Mille watch is inconsistent with NY B87955, NY B88308, and NY B87974, supra. In these rulings, the watches were classified in heading 9101 as “[w]rist watches . . . with case of precious metal or of metal clad with precious metal. . .” Like the instant watch, they also had sapphire crystals that covered the face and dial of the watches. However, the watch cases in NY B87955, NY B88308, and NY B87974 were wholly of precious metal. Conversely, the protested watch case is not wholly of precious metal because the back of the watch case is made in part of synthetic sapphire, similar to the processed synthetic sapphire wafers in HQ 967923. Therefore, classification of the protested watch in heading 9102 is consistent with NY B87955, NY B88308, and NY B87974.
In its September 29, 2017, Protestant argues that the synthetic sapphire pieces “attached to the front and back of the watch case are ‘watch crystals’ which are not part of the watch case.” In support, Protestant’s submission contains a declaration of a personal property appraiser with claimed expertise in appraising watches and clocks. In paragraph 7 of this declaration, Protestant’s expert asserts that “[j]ust as the crystal that protects the dial is not considered part of the watch case, the crystal on a skeleton case back is not considered part of the case.” A watch crystal refers to the transparent “glass” that covers the face of the watch, protects it from the elements, and reduces glare. Just because the front and back of the case are made of the same synthetic sapphire does not mean they are both watch “crystals.” A watch crystal covering the face of the watch is a separate part of the watch and must be transparent in order to use the watch properly. Conversely, the synthetic sapphire piece integrated into the gold case back is an aesthetic design element that also functions to hold the movement and protect it from dust, dirt and debris which could easily render this expensive watch inoperable. Hence, Protestant’s argument that the synthetic sapphire mount can be removed from the case without affecting the function of the watch is incredible.
Protestant further asserts that the synthetic sapphire glass on the back of the watch case is not part of the case because watch glasses are normally produced by a different manufacturer than the case and movement and that watch glasses imported separately are classified based on their constituent material rather than under Chapter 91. We note that merchandise is classified at the time of entry. There is no indication in the entry documents that the merchandise is not a complete watch, with the synthetic sapphire crystal and back portion intact, at the time of entry. Therefore, the watch case is not “wholly of precious metal or of metal clad with precious metal” and cannot be classified in heading 9101, HTSUS.
Lastly, Protestant claims that the merchandise should be classified in heading 9101, HTSUS, because it is the type of expensive Swiss-made watch that Congress intended to be classified duty-free under heading 9101 rather than in heading 9102. In essence, Protestant is asserting that all expensive Swiss-made watches should be classified in heading 9101, regardless of whether or not they meet the tariff terms of that heading. To this we respond that CBP is empowered only to administer the tariff as it is written. Protestant’s argument may be better directed toward Congress.
Based on the foregoing, we find that the instant watch is classified under heading 9102, HTSUS, as “[w]rist watches . . . other than those of heading 9101.”
HOLDING:
Pursuant to GRI 1, the subject watch is classified in heading 9102, HTSUS, specifically in subheading 9102.21.90, HTSUS, as “[w]rist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: [o]ther wrist watches, whether or not incorporating a stop watch facility: [w]ith automatic winding: [h]aving over 17 jewels in the movement: [o]ther.” The column one, general rate of duty is $1.53 each plus 4.2% on the case and 2% on the strap, band or bracelet.
The Protest is DENIED.
In accordance with Section IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, 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 mailing the decision. Sixty days from the date of this letter, the Office of Trade will make this letter available to CBP personnel and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division