In the case of Bulova Watch Co., Inc. v. United States in 1960, the U.S Supreme Court ruled on a dispute regarding import duties on watch movements (the internal mechanism of a watch). The Bulova Watch Company imported unassembled parts from Switzerland and assembled them into watches within the United States. They argued that these should be classified as domestic products, thus exempting them from certain import duties under Paragraph 1529(a) of Title 19, which provides for duty-free entry for articles manufactured in bonded warehouses from foreign materials if they are not sold or removed until after manufacture is completed. However, the court disagreed with this interpretation and held that assembling foreign-made components did not constitute manufacturing under Paragraph 1529(a), hence these were subject to import duties. The decision was based on an understanding that "manufacturing" implies more than mere assembly; it involves transforming raw materials into new commercial goods rather than simply putting together pre-manufactured pieces. Therefore, despite being assembled domestically, since their essential character remained unchanged through assembly process - they were still considered imports subject to relevant taxes.

In the dissenting opinion for Bulova Watch Co., Inc. v. United States, it was argued that the majority's decision to uphold a tariff on imported watch movements assembled into watches in Puerto Rico and then shipped to mainland U.S., contradicted previous court rulings and legislative intent. The dissent pointed out that under prior case law, goods produced in U.S territories were considered domestic products not subject to import duties when brought into continental U.S.. They also highlighted Congress' intention of promoting economic development in these territories by exempting their products from such tariffs. Therefore, they believed that treating these watches as foreign goods subjected them unfairly to double taxation - once when parts entered Puerto Rico and again when finished product entered mainland US - which went against principles of fairness and equity.