Belfont Sales Corp. v. US

• Decision Date: 30 July 1987
• Docket Number: Court No. 81-12-01724-S.
• Citation: 11 CIT 541,666 F. Supp. 1568
• Parties: BELFONT SALES CORP., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

666 F. Supp. 1568

11 CIT 541

BELFONT SALES CORP., Plaintiff, v. The UNITED STATES, Defendant.

Court No. 81-12-01724-S.

United States Court of International Trade.

July 30, 1987.

Stephen R. Sosnov, for plaintiff.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Attorney in Charge, Intern. Trade Field Office, Commercial Litigation Branch, U.S. Dept. of Justice, Judith M. Barzilay and Paula N. Rubin, New York City, for defendant.

OPINION

AQUILINO, Judge:

This case challenges Customs Service classification under TSUS item 715.05 ("Watches") of merchandise referred to collectively hereinafter as a quartz analogue watch or "QAW". Duties were assessed under item 716.27 or item 716.29 according to the widths of those QAW elements considered "watch movements" and under item 720.24 or item 720.28, depending on the composition of their cases. The plaintiff claims that the merchandise was dutiable as an entirety under item 688.45 ("Electrical articles and electrical parts of articles, not specifically provided for: ... Other").

I

In order for a timepiece to be classified as Customs did herein, it must contain a "watch movement". Compare TSUS Schedule 7, Part 2, Subpart E (1980) with Texas Instruments Inc. v. United States, 82 Cust.Ct. 272, C.D. 4810, 475 F.Supp. 1183 (1979), aff'd, 67 CCPA 59, C.A.D. 1244, 620 F.2d 269 (1980) "Texas Instruments I"; Texas Instruments Inc. v. United States, 82 Cust.Ct. 287, C.D. 4811, 475 F.Supp. 1193 (1979), aff'd, 67 CCPA 57, C.A.D. 1243, 620 F.2d 272 (1980); and Texas Instruments Inc. v. United States, 1 CIT 236, 518 F.Supp. 1341 (1981), aff'd, 69 CCPA 136, 673 F.2d 1375 (1982) "Texas Instruments III".

In Texas Instruments I, the Court of Customs and Patent Appeals agreed with the Customs Court that a watch movement "requires a mechanism for the transfer of motion". 67 CCPA at 62, 620 F.2d at 271. Since the timepieces at issue therein were found to have no parts that "transmit mechanical energy or transfer motion to or from any other part"¹, the CCPA upheld the trial court's determination that they did not contain a movement.

In its protest to the Customs Service, the plaintiff herein claimed that the QAW was improperly classified because

the electronic module and its housing do not incorporate the transfer of physical motion, and therefore do not constitute a movement within the intendment of the Tariff schedules sic of the United States.

At trial, the plaintiff presented one expert witness and ten exhibits in support of its position that the QAW does not contain a watch movement. Exhibit 4 describes the operation of a QAW as follows:

Oscillatory electric signals are produced exactly at 32,768Hz by an oscillator circuit consisting of a crystal oscillator and C/MOS-LSI.² The oscillator circuit includes a trimmer capacitor used to adjust the rate and a fixed capacitor for stable oscillation.

In the frequency divider circuit, the 32,768Hz frequency is successively halved 15 times by a flip-flop circuit until an output pulse of 1Hz is obtained.

The drive circuit delivers alternately a positive and a negative pulse at one-second intervals to the drive coil on the pulse motor.

Upon receiving a pulse current on its drive coil, the pulse motor instantly makes an intermittent rotary motion along an angular distance of 60 deg. every one second.

Rotation of the pulse motor is transmitted to the train wheel to drive the second, minute and hour hands, and the calendar mechanism.

Plaintiff's expert, a second-generation watchmaker and former Customs Assistant Area Director for Classification and Value, opined that the merchandise at issue does not contain a watch movement since it does not have a balance wheel, a mainspring or an escapement. While recognizing that a QAW contains a stepping motor that is "part of the movement of the various wheels which subsequently move the face of the watch"³ and a gear train, with several pinions, which moves the hands⁴, the witness claimed that these elements of a watch were never known in the trade and commerce of the United States as a watch movement. See Tr. at 24.

This testimony is diminished, however, by the contents of an affidavit given by this same expert in Texas Instruments III, where he declared:

... It is my opinion that the term, movement, is not limited to those articles which employ balance wheels and hairsprings to operate. Indeed, in commercial parlance, the term movement refers to both the traditional balance wheel movement and to the electronic "module".⁵

In that case, the module at issue was incorporated in a quartz digital watch, a solid-state electronic timepiece which the court(s) found not to contain a movement. That position of this witness is hard to reconcile with his testimony in the case at bar. If one believes that the quartz digital watch entails a movement, it would seem a fortiori that the same person would consider the QAW, with its distinct moving parts, to have a watch movement.⁶

Defendant's witness, Henry B. Fried, a third-generation watchmaker, teacher, and an author in the field of horology, testified that the term watch movement refers to "the all-inclusive enclosure in the watch case when it contains mechanical elements". Tr. at 70. Those mechanical elements "transfer motion, visibly, physically, from the power source to the hands". Id. He pointed out that the QAW contains the following parts which are identical to those found in a mechanical watch:

center pinion, center wheel, third wheel, fourth wheel, fourth wheel pinion, ... a cannon pinion, and hour wheel, minute wheel, minute wheel pinion, index wheel, clutch wheel, clutch spring, clutch and crown and stem and a spring, clock springs, fan dial and hands. Id. at 69.

Some of those wheels are also found in tuning-fork watches like the Bulova Accutron. Id. Mr. Fried disagreed with plaintiff's expert, who had testified that that timepiece does not contain a movement. The question of whether the Accutron, which apparently has been classified by Customs under Schedule 7, contains a movement seems to be analogous to the question as to whether the QAW contains a movement.⁷ Mr. Fried testified that the

tuning fork operates ... electrically. It is stimulated, so its tines vibrate, in its own natural frequency. The movement of the tines is wide enough, in its amplitude, so it can accept a pawl, mounted on any one of the tines, which, in close proximity to an index wheel, a tiny watch ratchet wheel with slanted teeth, ... will nudge it, at each oscillation of the tuning fork and become the motor, which turns all the wheels, eventually, to indicate time upon its dial and hands, through the dial and hands. Id. at 59.

While the Accutron contains an indexing wheel, third wheel, fourth wheel, minute wheel, hour wheel, intermediate wheel and setting wheels which are similar to those found in mechanical watches⁸, like the QAW, it has no balance wheel or escapement. See id. at 26.

The trial court in Texas Instruments I determined that the quartz digital watch is

unlike the conventional watch containing a balance assembly or the electro-mechanical watch containing a tuning fork in both of which a definite mechanical motion is transferred to other component parts within the movement .... 82 Cust.Ct. at 279, 475 F.Supp. at 1187.

The QAW is similar to the electro-mechanical watch in that "mechanical motion is transferred to other component parts" in each. This fact thus distinguishes the QAW from the merchandise at issue in Texas Instruments I and leads this court to find that the QAW does contain a watch movement. This is not to say that the QAW (or the Accutron) have many of the parts that were described in Texas Instruments I as the "principle components comprising a conventional watch movement"⁹, but the quantum of such elements is not conclusive as to whether nonconventional timepieces contain watch movements. Cf. P. Hood, How Time Is Measured 29 (2d ed. 1969) (describing the Accutron as an "unusual watch").

The plaintiff maintains that "Congress intentionally did not wish to include watch movements with other than the traditional balance wheel and hair spring in the classification of `watch movements'". Plaintiff's Brief, p. 26. The legislative history does not support this position. While there was a proposal that would have segregated in the TSUS movements not regulated by a balance wheel and a hairspring from those regulated in the traditional manner, that text was deleted before the tariff schedules were adopted. Many importers opposed the proposal, which would have instituted a higher rate of duty for nonconventional movements and thereby "imposed an enormous handicap on the introduction of new technology in the watch industry". Tariff Classification Study: Explanatory and Background Materials, Sched. 7 at 730 (1960).

The plaintiff also insists that classification under Schedule 7 is improper since "quartz analog watches are electrical articles based on technology alien to the pre-1962 horological industry". Plaintiff's Brief, p. 41. While the QAW apparently was not in existence at the time the TSUS was enacted, tariff schedules do "embrace merchandise unknown at the time of their enactment". Texas Instruments I, 82 Cust.Ct. at 282, 475 F.Supp. at 1190. As explained by the court in Smillie & Co. v. United States, 12 Ct.Cust.App. 365, 367, T.D. 40520 (1924),

the statute will be held to apply if the articles possess an essential resemblance to the ones named in the statute in those particulars which the statute established as the criteria of the classification.

The QAW does possess a resemblance to the traditional analogue watch with a movement. Both have mechanisms that transfer motion to other component parts. They also have a similar outward appearance and contain a number of moving parts which are the same. Finally, plaintiff's characterization of the technology of the QAW as "alien" to the 1962 horological industry is at odds...