OT:RR:CTF:VS H326900 AMW
Director
Consumer Products and Mass Merchandising CEE
U.S. Customs and Border Protection
1500 Centre Pkwy
Atlanta, GA 30344
C/O Paul Sumbi, Assistant Center Director
RE: Protest and Application for Further Review of 2720-20-101252; Valuation of Imported
Watch Components; Statistical Note 1, Chapter 91, HTSUS
Dear Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 2720-
20-101252, dated January 31, 2020, filed against U.S. Customs and Border Protection’s
(“CBP’s”) decision to liquidate the subject imported wrist watches based on a revised
apportionment of the value of the underlying components in accordance with Statistical Note 1,
Chapter 91, Harmonized Tariff Schedule of the United States (“HTSUS”). The Protestant, [xx]
(“[xx]” or the “Protestant”), seeks reliquidation at the component valuation declared at entry.
FACTS:
This protest relates to approximately 84 entries of wrist watches imported by the
Protestant’s [xx] Division (“[xx]” or the “Subsidiary”) during the year 2018. The subject
watches were typically purchased completely assembled from unrelated suppliers. However, the
protest asserts that the Subsidiary “plays an active role in the design of all watches that bear the
[xx] name and trademark.” Upon purchase, the Protestant states that each vendor provided the
Subsidiary with an invoice and an allocation of the purchase price to the various statistically
enumerated components of each watch purchased, all of which accompanied the imported goods.
The Subsidiary based the component allocation reported to CBP on the invoice and
apportionment representations provided by its suppliers. 1 As outlined in the subject entries, the
1
Per [xx] protest, since April 2019, all Subsidiary-brand watches are purchased by the Subsidiary from [xx] and the
Subsidiary no longer deals directly with third-party assemblers. All of the subject entries predate this arrangement,
however.
Protestant declared most of the watches as originating in Japan and exported to the United States
via Hong Kong.
The Protestant declared the valuation of the subject watches to be the transaction value
between the Subsidiary and the watches’ manufacturers. However, regarding the Statistical Note
1, Chapter 91, HTSUS, component apportionment, CBP reliquidated the subject watches in
2020, assessing new component valuation apportionments for the underlying entries. CBP’s
decision to reliquidate the entries followed an audit regarding the import practices of the
Protestant. In 2017 and 2018, CBP’s Trade Regulatory Audit (“TRA”) audited entries of
watches by the Protestant for the period of 2013-2017. In so doing, TRA determined that the
Protestant, “did not provide cost production records or any other supporting documentation to
reasonably support their apportionment of the value of the watch components….” Instead, TRA
found that the valuation attributed to the movement for similar “compliant companies” averaged
approximately 33% of the watches’ total value for the scope period of 2013 to 2017, which
represented a significant departure from the 70%-75% reported by the Protestant. CBP then
reliquidated the subject 2018 entries in accordance with TRA’s findings. Although the audit
only reviewed practices related to the Protestant’s importation of [xx]-brand watches, and
seemingly did not relate to [xx]-brand products, CBP also subsequently reliquidated the subject
entries of watches imported by the Subsidiary.
In reapportioning the valuation of the imported watch components, TRA utilized
Reapportionment Percentages Constructed from Arithmetic Means of Stratified Entry Parameters
(“RPCARSEP”). RPCARSEP is maintained by the Consumer Products and Mass
Merchandising CEE (the “CEE”) and is used to assess the valuation for imported watch
components when complete information is otherwise unavailable. In relevant part, RPCARSEP
consists of hundreds of thousands of lines of entry data for watches imported by “compliant”
importers (i.e., those importers that have demonstrated reasonable apportionment and value
compliance based on verification of underlying production records). These data points may then
be used to calculate the average valuation proportion for each component of a watch based on the
following parameters: price range, year of import, country of origin, and classification. The
CEE has also clarified that revised percentages are only calculated for watches for which there
exist direct or reasonably comparable products represented in the underlying dataset (i.e., within
the same price range, year of importation, country of origin, and classification). If no direct or
reasonably adjusted comparison can be made from the data available, then no adjustment is made
and CBP will accept the original valuation.
The Protestant challenges CBP’s assessment on several bases, which can be divided into
two categories: (1) that its initial means of valuing the watch components was a reasonable
method of appraisal previously accepted by CBP; and (2) that CBP erred in using the
RPCARSEP to reapportion the component value of the imported watches.
2
ISSUE:
1. Whether the Protestant correctly apportioned the valuation of the watch components in
compliance with Statistical Note 1, Chapter 91, of the HTSUS?
2. Whether CBP’s use of the RPCRSEP to reallocate the component valuation complied
with Statistical Note 1, Chapter 91, HTSUS?
LAW AND ANALYSIS:
As an initial matter, we note that the protest was timely filed on January 1, 2020, within
180 days of liquidation of the entry on September 13, 2019, under the statutory provisions for
protests. See 19 U.S.C. §1514(c)(3).
Merchandise imported into the United States is appraised for customs purposes in
accordance with Section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act
of 1979 (TAA; 19 U.S.C. § 1401a). The primary method of appraisement is transaction value,
which is defined as “the price actually paid or payable for the merchandise when sold for
exportation to the United States,” plus amounts for certain statutorily enumerated additions to the
extent not otherwise included in the price actually paid or payable. See 19 U.S.C. § 1401a(b)(1).
As provided in 19 U.S.C. §1401a(b)(4):
(A) The term “price actually paid or payable” means the total payment (whether direct or
indirect, and exclusive of any costs, charges, or expenses incurred for transportation,
insurance, and related services incident to the international shipment of the merchandise
from the country of exportation to the place of importation in the United States) made, or
to be made, for imported merchandise by the buyer to, or for the benefit of, the seller.
Section 152.103(a)(1), CBP Regulations (19 CFR §152.103(a)(1)) provides, in pertinent
part, as follows:
In determining transaction value, the price actually paid or payable will be considered
without regard to its method of derivation. It may be the result of discounts, increases, or
negotiations, or may be arrived at by the application of a formula, such as the price in
effect on the date of export in the London Commodity Market.
When imported merchandise cannot be appraised on the basis of transaction value, it is
appraised in accordance with the remaining methods of valuation, applied in sequential order.
(19 U.S.C. § 1401a(a)(1)). The alternative bases of appraisement, in order of precedence, are:
the transaction value of identical or similar merchandise (19 U.S.C. § 1401a(c)); deductive value
(19 U.S.C. § 1401a(d)); computed value (19 U.S.C. § 1401a(e)); and the “fallback” method (19
U.S.C. § 1401a(f)).
3
In the present matter, as noted above, the Protestant utilized the transaction value in
reporting the total value of each imported watch. The Subsidiary purchased the imported
watches from unrelated manufacturers, and the overall valuation of the subject watches was not
changed when the merchandise was reliquidated. As such, our analysis focuses solely on the
apportionment of the component values of the watches as outlined in Statistical Note 1, Chapter
91, HTSUS.
Beyond the general requirements of 19 U.S.C. § 1401a, in appraising watches and
timepieces, the HTSUS also requires that certain additional information regarding watch
component values be declared to CBP. Watches are classified in Chapter 91, HTSUS. The
Additional U.S. Notes to Chapter 91 inform us as to the elements of a watch, providing:
For the purposes of this chapter:
(a) The term “watches” embraces timepieces (including timepieces having special
features, such as chronographs, calendar watches and watches designed for use in
skin diving) of a kind for wearing or carrying on the person whether or not the
movement contained therein conforms to the definition of “watch movements” in
note 3, above. Timepieces incorporating a stand, however simple, are not classifiable
as watches.
We note that this is essentially the same definition of “watches” provided in the prior
Tariff Schedules of the United States, with minor differences. Additional U.S. Note 2 provides:
Watch straps, watch bands and watch bracelets entered with wrist watches and of
a kind normally sold therewith, whether or not attached, are classified with the
watch in heading 9101 or 9102. Otherwise, watch straps, watch bands and watch
bracelets shall be classified in heading 9113.
Wrist watches imported into the United States, are not assessed duty on the appraised
value of the watch and strap, band or bracelet as a whole. Duty is instead assessed on the
allocation of the appraised value of watch components, as duty is assessed against the
components, and not the watch. In relevant part, Statistical Note 1, Chapter 91 of the HTSUS,
requires additional information regarding the duty rate set forth for the subject watches and
states, in relevant part, as follows:
The calculation of duties on various watches, clocks, watch movements and clock
movements requires that these articles be constructively separated into their
component parts and each component separately valued. The individual
components shall be separately reported under the statistical suffixes show (sic)
below. In each instance the sum of the values of the individual components shall
be equal to the total value of the article. . . .
4
In other words, Statistical Note 1 to Chapter 91 of the HTSUS provides that the value of a
watch must be reported to CBP by specifying the value of four individual components (also
referred to herein as the “statistical breakouts”). The four statistical breakouts are: (1) the
movement; (2) the case; (3) the strap, band, or bracelet; and (4) the battery (collectively, the
“components” or “breakouts”). Each of these components is subject to a separate duty rate, with
the movement typically being assigned the lowest duty, a flat duty rate as opposed to an ad
valorem amount. The total value of the watch must equal the value of the individual breakouts.
See also, See United States v. Continental Lemania, Inc., 21 CCPA 192 (1933) (“In a long line of
decisions, among them United States v. European Watch Co., 11 Cust. Ct. App. 363, T.D. 59160,
it is definitely settled that watch movements and watchcases had by judicial determination, as
well as by departmental direction, attained a settled definite status as separate entities for tariff
purposes prior to the act of 1913.”)
1. Whether the Subsidiary correctly apportioned the valuation of the watch components
in compliance with Statistical Note 1, Chapter 91, HTSUS
First, the Protestant asserts the valuation of the subject movements was similar to that
obtained by subtracting the component value for the strap/band and case from the total
transaction value of a watch. In doing so, the entirety of the watch’s value attributable to
overhead, profit, and intellectual property would be attributed to the valuation of the movement.
The requestor asserts that its method of valuation apportionment was in line with CBP
Headquarters Ruling Letter (“HQ”) H259490, dated April 4, 2017. In that matter, CBP
permitted the importer of certain “shop-worn” watches to deduct the costs of the watch case,
strap or band, and battery from the overall value of the watch to determine the value of the watch
movement. In support of this position, the Protestant also provided the following: (1) “true cost
quotation forms” for a representative sample of imported watches, which provides the producers’
estimated component costs as part of the product development and negotiation process; and (2)
analytical data based on supplier component invoices for a select sample of “high-volume” cases
and attachments.
Second, the Protestant asserts that there was no legal basis for CBP to use RPCARSEP to
appraise the subject merchandise. To begin with, the Protestant claims that CBP’s use of
RPCARSEP is in contravention of agency “practice” accepted by CBP since at least the 1980s
and that any change should be enacted via statutory notice and comment procedures promulgated
at 19 U.S.C. § 1625. Further, the Protestant argues that CBP should not have revalued the
merchandise under RPCARSEP to begin with because the imported Subsidiary-brand watches
were not the subject of TRA’s audit of the Protestant. In addition, the Protestant asserts that it is
difficult to ascertain the basis upon which the RPCARSEP calculations were made because CBP
has not provided sufficient information regarding the exact basis of appraisement, the nature and
description of the surrogate transactions and products, and how the information was gathered to
ensure appropriate comparisons.
Although the protest does not fully outline the methodology used to apportion the
component values at entry, it appears the Subsidiary attributed all or most of the intangible value
5
of each watch (e.g., profit, overhead, intellectual property value) to the movement of the watch.
For 2017, the Protestant calculated that the apportionment methodology discussed in HQ
H259490, when attributed to the Subsidiary-brand watches, would have resulted in an average of
57.42% of the value of the high-volume watches being attributed to the movement as opposed to
the actual average apportionment of 46.43% (a delta of 10.99% of the watches’ value). For
2018, the Protestant calculates that the HQ H259490 methodology would have resulted in an
average of 51.82% of the watches’ value being attributed to the movement as opposed to the
actual average apportionment of 32.01% (a delta of 19.81%).
In response, we determine that the Protestant’s reference to HQ H259490 is misplaced,
and that apportioning the value of the movement by subtracting the value of the other
components from the total transaction value cannot be used. In HQ H259490, the importer,
Timeworks International Inc. (“Timeworks”), engaged in the importation of watches under two
different types of transactions. The first type of transaction involved the importer engaging
manufacturers to produce watches for sale (the “manufacturer-produced watches”). As
Timeworks engaged the manufacturers directly, it had access to invoices showing the actual
costs of the watch components assessed duty under the watch provisions set forth in Chapter 91.
The second type of transaction involved Timeworks importing, for the most part, “shop-worn”
luxury watches (e.g., factory-condition luxury watches previously used as shop display models,
possibly with slight scratching or cosmetic defects). For the shop-worn watches, Timeworks
knew the complete amount it paid for a finished watch, but did not have insight into the
individual statistical breakouts. As a result, Timeworks developed a spreadsheet, based upon its
experience and familiarity with the direct manufacturing costs of similar items, upon which to
base values for watch components in the shop-worn watches. To determine the value of a shop-
worn watch’s movement, Timeworks subtracted the calculated value of the watch case,
strap/bracelet, and battery (if the watch had a quartz movement) from the amount paid for the
finished watch.
In reviewing Timeworks’ proposal, CBP stated that “based on the fact that Timeworks
has access to cost information for the components made for its own Swiss origin house brand
watches that are very comparable to the components of the luxury shop-worn Swiss origin
watches that it is importing, CBP believes that Timeworks is in a unique position to furnish an
accurate valuation for the four watch components that Statistical Note 1 of Chapter 91 of the
HTSUS requires to be reported.” Further, CBP was satisfied that the watch components for
Timeworks in-house brand watches were basically comparable to the components used in the
other brands of Swiss watches it was importing. As a result, for the shop-worn watches, CBP
permitted Timeworks to apply the cost information obtained from its manufacturer-produced
watches to calculate the value of the individual components of the shop-worn watches,
subtracting the component costs of the case, band/bracelet, and battery from the total cost of the
watch to obtain the value of the movement. Importantly, however, this decision did not permit
such an approach for the watches produced by manufacturers that Timeworks had engaged
directly; instead, Timeworks had complete insights into the component costs and apportioned the
value of each breakout based on the information obtained from its manufacturers.
6
In HQ H305372, dated January 17, 2020, CBP declined to extend the rationale in HQ
H259490 to various models of imported Rolex watches. In HQ H305372, the importer did not
specify whether the subject watches were new, used, or shop-worn, and did not have access to
component data of similar watches as Timeworks did in HQ H259490. Instead, the importer in
HQ H305372 proposed to value the individual breakouts based on the cost of similar watch
components as found in a public internet search (e.g., for costs of identical leather, rubber,
textile, and metal bands). The importer then proposed to use the same component percentage
value allocations regardless of type, value, or classification of the entered watches. CBP
declined to approve this methodology, distinguishing the importer’s approach from HQ H259490
on the basis that the importer did not have the same insight into specific component costs via the
separate purchase of manufacturer-produced watches as Timeworks did. In addition, CBP noted
that, in that matter, it would not make sense to apportion the entire cost of intellectual property to
the movement:
A search of the United States Patent and Trademark website reveals that patents
are assigned to Rolex for components of watch straps and watch bracelets, and for
watch cases, in addition to patents which are attributable to watch movements.
Thus, in this case, it is clearly erroneous to allocate all of the intellectual property
value of the watches to the movement components. Further, the labor for
encasing the movement into the watch case should not be wholly attributed to the
movement. See S.H. Pomerance Co., 21 Cust. Ct. 334 (1948) wherein the court
upheld the decision of the appraiser in including part of the “casing-up expenses,”
that is, “the time and labor expended on the watch cases and watch movements . .
. in combining them to form watches, . . .” in the value of the cases, as well as the
value of the movements.
In HQ H331108, dated June 11, 2025, CBP noted that, when taken together, HQ
H259490 and HQ H305372 demonstrate that it is only in a narrow set of circumstances that CBP
will permit importers to calculate the value of a watch’s movement by subtracting the material
and component costs for the non-movement components from the watch’s total value. As with
HQ H259490, such a method may be appropriate when an importer of used watches for which it
has no component-level cost information has specific, component-level cost data for similar
watches that it sources from contract or third-party manufacturers. In contrast, CBP has not
approved such an approach when an importer has specific, component-level data for the
imported watches (e.g., the manufacturer-sourced watches in HQ H259490) or when the
importer cannot access specific, comparable values. In addition, as in H305372, an importer
may not apportion the entire profit, labor, or intellectual property costs associated with a watch
to the movement in instances where it is clear such costs are not entirely attributable to the
movement. See HQ H305372 (although in HQ H259490, CBP accepted Timeworks contention
that the majority of the value contained in a brand name of a watch can generally be attributed to
the movement, it did not address whether all intellectual property value should be attributed to
the movement.) Nevertheless, due to the complexity of a watch’s movement, CBP has
recognized that a majority of labor, overhead, and profit costs is likely to be allocated to the
7
movement. See id. CBP does not require that a majority of labor, overhead, and profit expenses
be allocated to the movement, however.
Based on the above, HQ H259490 is not applicable. Unlike Timeworks, the Protestant
did not import shop-worn watches produced by unrelated parties; the Protestant purchased the
Subsidiary-brand watches from unrelated parties, receiving component allocation data in both the
initial “true cost quotation forms” as well as the subsequent invoices. This level of insight is
similar to the quality of information Timeworks had regarding its manufacturer-sourced watches
in HQ H259490. In relevant part, the manufacturer-sourced watches in HQ H259490 were
produced in relation to Timeworks’ own in-house brands and for which the company had direct
contact with its manufacturers and could “obtain the invoices showing the actual cost of each of
the four watch components.” In addition, as in HQ H305372 and S.H. Pomerance Co., 21 Cust.
Ct. 334 (1948), it would be clearly erroneous to allocate the entire value of the watches’
intellectual property, labor, and profit costs to the value of the movement. For instance, in an
internet search of Subsidiary-brand watches, CBP confirms that the Subsidiary’s logo is placed
not just on its watches’ dials (which is considered part of the movement), but also often appears
on a watch’s band/strap and case. As such, we determine that HQ H259490 is inapplicable to the
present matter.
In any event, Protestant’s method of allocating component costs in the subject entries is
not supported by its own background documentation. The protest claims that the apportionment
methodology used was appropriate because each movement “is a complex, high-precision
device, containing a large number of miniature parts with critical tolerances…created and
assembled using…expensive machine tools.” This claim is not supported by the documentation
provided by the Protestant. Specifically, none of the exemplary model numbers involve a watch
model in which the movement represents over 50% of the component/material cost.
Furthermore, 10 of 11 quote forms reviewed by CBP listed the underlying watch’s case as the
most expensive component, not the movement. Indeed, the reliquidated apportionment used by
CBP, which factored in the apportionment of other importers of similar and exact merchandise,
was typically much closer to the actual component allocations provided in the sample quotation
forms.
We therefore determine that the Protestant’s apportionment of the Subsidiary-brand
watches in the subject entries was not in accordance with Statistical Note 1, Chapter 91, HTSUS.
2. Whether CBP’s use of RPCARSEP complied with Statistical Note 1, Chapter 91,
HTSUS?
As outlined above, TRA utilized RPCARSEP to recalculate the apportionment used in
reference to similar imported watches, and the subject entries were reliquidated accordingly.
The Protestant disputes this methodology.
As it is apparent from the analysis above that the Protestant’s allocation of value to the
components of the imported Subsidiary-brand watches is clearly flawed and incorrect, it was
8
appropriate for TRA and the CEE to reject it. Under section 500 of the Tariff Act of 1930, as
amended (19 U.S.C. § 1500), CBP is granted the authority to determine the valuation of
imported merchandise. The Statement of Administrative Action (“SAA”), which constitutes part
of the legislative history of section 402 of the Tariff Act of 1930, as amended by the Trade
Agreements Act of 1979, provides:
Section 500 [19 U.S.C. § 1500] is the general authority for Customs to appraise
merchandise. It is not a separate basis of valuation and cannot be used as such.
Section 500 allows Customs to consider the best evidence available in appraising
merchandise. . . . Section 500 authorizes the appraising office to weigh the nature
of the evidence before him in appraising the imported merchandise. . . . As broad
as this grant of authority may be, it is clear, under authority of judicial decisions,
that it does not give the appraising officer authority to do whatever he wants. He
must and will appraise merchandise under the constraints of section 402.
In those transactions where no accurate invoice or other documentation is available, and
the importer is unable, or refuses to provide such information, then reasonable ways and means
will be used to determine the appropriate value, using whatever evidence is available, again
within the constraints of section 402. See, e.g., HQ H019263, dated November 8, 2010.
Although the total appraised value of the watches is not analyzed in this memorandum,
the correct allocation of the watches’ value to the underlying components, which are the
imported merchandise being assessed duty, falls within CBP’s general appraisement authority set
forth in 19 U.S.C. § 1500. It is our understanding that TRA and the CEE utilized RPCARSEP as
a fallback methodology to reallocate the watch components. RPCARSEP is based on the
experience of CBP personnel as well as information regarding similar merchandise that CBP has
obtained through data obtained from previous importations. These data points may then be used
to calculate the average valuation proportion for each component of a watch based on the
following parameters: price range, year of importation, country of origin, and classification.
The CEE has also clarified that revised percentages will only be calculated for watches for which
there exist direct or reasonably comparable products represented in the underlying dataset (i.e.,
within the same price range, year of importation, country of origin, and classification). As
determined in HQ H305372, a fallback methodology “based upon the experience of CBP
personnel and information regarding similar merchandise which the CEE had obtained through
previous importations” to reallocate the valuation of watch components for the purpose of duty
assessment falls under 19 U.S.C. § 1401a(f) and the provisions of 19 CFR § 152.107(b) with
regard to identical and similar merchandise and flexibility as to the time of exportation.
Next, the Protestant argues that CBP’s reliquidation is “based…on an incorrect premise”
because the re-appraisement occurred because of the audit report issued to the Protestant. Based
on our review of the audit report, we agree that the scope of the audit was limited to the
Protestant’s importation of [xx]-brand watches rather than the Subsidiary-brand watches subject
to this AFR. Nevertheless, as outlined in the prior paragraphs, 19 U.S.C. § 1500 provides CBP
with broad, general authority to revalue imported merchandise in situations where the importer
fails or refuses to substantiate the valuation declared at entry. There is no requirement in the
statute that CBP can only appraise imported merchandise after a comprehensive audit of the
9
importer. As such, CBP clearly had authority to appraise and reliquidate the subject
merchandise.
The Subsidiary, for its part, also argues that CBP’s reapportionment of the imported
merchandise is contrary to CBP “practice of classifying [xx] entries based on longstanding
statistical allocations of cost…consistent with Customs published guidance….” In support, [xx]
provides a “Public Bulletin” issued by the Port of Los Angeles on February 19, 1987. This
document provides several possible component allocations for “watches made or assembled in
Hong Kong.” Even if this document were to represent a binding ruling, it would not apply to the
subject entries. Although the subject watches were shipped through Hong Kong, the underlying
entry forms indicate the subject watches originate in Japan. Further, the Protestant has provided
no other documentation demonstrating that the underlying watches were produced or assembled
in Hong Kong.
Finally, the Protestant argues that RPCARSEP provides “arbitrary results inconsistent
with the value allocations provided by [xx] suppliers.” This argument, however, does not match
with the information provided by the Protestant. Indeed, as noted above, for the 11 exemplary
products reviewed by CBP, the valuation apportionment provided by RPCARSEP more closely
resembles the component apportionment contained in the vender quotation forms than does the
Subsidiary’s initial valuation apportionment. This comparison can be seen in the following
chart:
Watch Component Cost Quote Form [xx] CBP Reliquidated
Model (via Quotation Percentages Apportionment Apportionment
Form) at Entry
[xx] Component cost: Case: 42.8% Case: 28.8% Case: 40.7%
$32.22 Band: 11.8% Band: 15.0% Band: 26.1%
Case: $13.80 Movement: 45.4% Movement: 60% Movement: 32.3%
Band: $3.80
Movement: $14.62
[xx] Component cost: Case: 40.9% Case: 24.0% Case: 29.4%
$41.6 Band: 26.4% Band: 16.0% Band: 29.0%
Case: $17.00 Movement: 32.7% Movement: 60% Movement: 41.6%
Band: $11.00
Movement: $13.60
[xx] Component cost: Case: 51.3% Case: 24.0% Case: 39.8%
$50.50 Band: 21.8% Band: 16.0% Band: 25.1%
Case: $25.9 Movement: 26.9% Movement: 60% Movement: 35%
Band: $11
Movement: $13.60
[xx] Component cost: Case: 38.9% Case: 32.6% Case: 34.3%
$63.19 Band: 23.9% Band: 21.2% Band: 31.3%
Case: $24.58 Movement: 37.2% Movement: 46.2% Movement: 34.4%
Band: $15.09
Movement: $23.52
10
[xx] Component Cost: Case: 43.9% Case: 29.4% Case: 32.8%
$20.03 Band: 35.4% Band: 19.6% Band: 34.8%
Case: $8.8 Movement: 20.6% Movement: 49.0% Movement: 31.4%
Band: $7.1
Movement: $4.13
[xx] Component cost: Case: 47.4% Case: 24.0% Case: 40.7%
$31.24 Band: 21.8% Band: 16.0% Band: 26.1%
Case: $14.82 Movement: 32.7% Movement: 60.0% Movement: 32.3%
Band: $6.80
Movement: $10.20
[xx] Component cost: Case: 46.0% Case: 26.3% Case: 42%
$8.92 Band: 24.7% Band: 16.4% Band: 31.7%
Case: $4.10 Movement: 29.4% Movement: 52.6% Movement: 24.5%
Band: $2.20
Movement: $2.62
[xx] Component cost: Case: 37.8% Case: 24% Case: 41.8%
$53.50 Band: 25.9% Band: 15.2% Band: 27.3%
Case: $20.20 Movement: 36.4% Movement: 60% Movement: 30.7%
Band: $13.85
Movement: $19.45
[xx] Component cost: Case: 43.1% Case: 32.4% Case: 29.4%
$39.36 Band: 14.6% Band: 13.3% Band: 29.0%
Case: $16.98 Movement: 42.3% Movement: 53.3% Movement: 41.6%
Band: $5.73
Movement: $16.65
[xx] Component Cost: Case: 49.4% Case: 24.0% Case: 29.4%
$45.17 Band: 18.3% Band: 16.0% Band: 29.0%
Case: $22.3 Movement: 32.4% Movement: 60.0% Movement: 41.6%
Band: $8.25
Movement: $14.62
[xx] Component cost: Case: 37.1% Case: 29.5% Case: 34.0%
$26.12 Band: 46.9% Band: 19.7% Band: 35.0%
Case: $9.70 Movement: 15.3% Movement: 49.2% Movement: 30.2%
Band: $12.25
Movement: $3.99
Finally, we note that use of the RPCARSEP is not compulsory. Should the Protestant
provide information, such as invoices from the seller/supplier evidencing the value of its watch
components, CBP will accept the values presented unless there is reason to doubt whether the
invoice reflects the price paid for these components.
Based upon our review, we agree that the Protestant’s value allocation is not a correct
application of Statistical Note 1, Chapter 91, HTSUS. As the Protestant has failed to support its
method of allocation of the Subsidiary-brand watches’ components, CBP correctly utilized a
“fallback” methodology to reapportion the components. The subject protest should be denied.
11
HOLDING:
Based on the above discussion, the protest should be denied. In accordance with the
Protest/Petition Processing Handbook (CIS 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 this decision must
be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the
Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and
to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/
which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov
and other methods of public distribution.
Sincerely,
For Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
12