Importing watches: duty, the marking rule, and what CBP seizes

Importing a watch is where a dealer meets three separate federal regimes at once: how the thing is classified and taxed, whether it is physically marked well enough to be allowed in at all, and whether the trademark on the dial belongs on a watch entering the United States.

None of them is a percentage of the invoice, which is what most people expect.

Duty is charged on four things, not one

Chapter 91 of the Harmonized Tariff Schedule treats a wrist watch as an assembly and taxes the parts at different rates. A typical line reads like this:

9102.21.10 — automatic winding, with strap, band or bracelet of textile material or of base metal — 75¢ each + 6% on the case + 14% on the strap, band or bracelet

So: a flat amount per watch for the movement, a percentage on the case, and a different percentage on the bracelet. Battery-powered lines add a fourth component — a percentage on the battery.

The consequence dealers miss: the same steel automatic on a leather strap is 9102.21.25 — 75¢ each + 6% on the case + 2.8% on the strap. Same watch, same movement, same case, and the strap component drops from 14% to 2.8% purely because a bracelet of base metal is treated differently from one of other materials.

The schedule slices further, on criteria that are frankly archaeological:

• Case material. Heading 9101 is watches with a case of precious metal or metal clad with precious metal. Heading 9102 is everything else. A gold Datejust and a steel one are not in the same heading.
• Jewel count in the movement. Lines separate "no jewels or only one jewel", "over 1 but not over 7 jewels", and higher counts.
• Movement size — over or not over 15.2 mm.
• Movement value — over or not over $15 each.

Two chapter notes decide what is even in the box. Note 2: straps, bands and bracelets entered with and attached to watches are classified with the watch; otherwise they go to heading 9113 on their own. Note 3: batteries entered with a battery-powered watch and intended for use with it are classified under the watch's provision.

A practical point falls out of all this. Because duty is apportioned across components, your declared value has to be apportioned too. Buying a watch as one lot at one price does not relieve you of splitting it, and how to do that defensibly is a question worth putting to a customs broker.

The marking rule that stops entry

This is the provision that can strand a shipment, and it is specific to our chapter.

Additional U.S. Note 4 to Chapter 91 provides that any movement or case in the chapter — imported separately or attached to a watch — "shall not be permitted to be entered" unless conspicuously and indelibly marked, by cutting, die-sinking, engraving, stamping (including indelible ink) or mold-marking.

What has to be there:

• Watch movements, marked on one or more of the bridges or top plates: the country of manufacture; the name of the manufacturer or purchaser; and — in words — the number of jewels, if any, serving a mechanical purpose as frictional bearings.
• Watch cases, marked on the inside or outside of the back: the country of manufacture, and the name of the manufacturer or purchaser.

Movements with opto-electronic display only, and cases designed for them, are excepted.

Read that against how vintage watches actually arrive. A caseback polished until the markings are ghosts. A service case from a parts drawer. A movement signed by a retailer rather than the maker. The note is written in terms of what the article carries now, at entry — not what it carried when it left the factory. Whether a once-marked, now-illegible case satisfies it is exactly the kind of question to settle with a broker before the watch ships, not after it is sitting in a CBP warehouse.

Counterfeit, copying, and gray market are three different things

19 CFR Part 133 separates them, and the differences decide whether you lose the watch.

A counterfeit mark is a spurious mark identical with, or substantially indistinguishable from, a mark registered on the Principal Register of the USPTO. CBP may detain suspect goods for up to 30 days from the date they are presented for examination; after that an unreleased article is deemed excluded.

Two things about the counterfeit track are worth knowing in advance. Within five business days of deciding to detain, CBP notifies the importer in writing — and tells the importer that it may disclose to the brand owner the information appearing on the goods and their packaging, including unredacted photographs, images or samples, unless the importer presents information within seven business days establishing the goods are not counterfeit. And critically, the cure available for lesser marks — grinding the mark off as a condition of entry — expressly does not apply to articles bearing counterfeit trademarks at the time of importation (§ 133.22(d)). There is no fixing it at the border.

A copying or simulating mark gets the 30 days and does get the cure. You can establish that the objectionable mark has been removed or obliterated so as to be "illegible and incapable of being reconstituted" — the regulation's own examples are grinding off imprinted trademarks wherever they appear, and removing and disposing of plates bearing the mark — or that you are the recordant or their designate, or that the recordant consented in writing. Miss the window and the merchandise is seized and forfeiture proceedings are instituted.

Restricted gray market articles are something else again: foreign-made goods bearing a genuine trademark identical with or substantially indistinguishable from one owned and recorded by a U.S. owner, imported without that owner's authorisation. The category covers marks applied by an independent licensee, marks applied under a foreign owner's authority where that owner is not the U.S. owner or under common control with them, and the "Lever rule" — marks applied by the U.S. owner or an affiliate to goods CBP has determined are physically and materially different from what the U.S. owner authorises for sale here.

There is a labelling route out of the last one. Physically and materially different goods bearing a genuine mark are not detained where the goods or their packaging carry a conspicuous, legible label — designed to stay on the product until first retail sale — reading:

"This product is not a product authorized by the United States trademark owner for importation and is physically and materially different from the authorized product."

The label has to sit close to the trademark in its most prominent location on the article or its retail packaging.

None of this depends on how the watch travelled

Section 133.24 applies the same restrictions, and the same 30-day detention from the date of notice, to articles accompanying an importer and to mail importations. For accompanied baggage the notice is oral, given by the inspector at the counter; for mail in non-commercial shipments, or commercial shipments valued at $250 or less, it comes on Customs Form 8.

Carrying it home in your bag, or having the seller post it, changes the paperwork and nothing else.

Where this connects

The marking rules here are about admissibility — whether the watch may enter the country. They are a different regime from the FTC and stamping rules about accuracy — what you may say about gold content once it is here. A case can be perfectly legal to describe as 18 karat and still be inadmissible for want of a country-of-manufacture mark, and the reverse. See describing a watch.

If you pay for an imported watch in cash, the cash reporting rules apply on top.