Lani has a good point.. but I feel that it has gone astray from Dudemeister's gist. In essence it seems as if there are now 2 distinct conversations:
1. The original conversation of whether or not an Authorised Dealer can confiscate your watches..
2. The right of Customs Agents to seize contraband/prohibited items that are crossing borders...
Customs officials would not be involved in the confiscation of a watch that is already in your possession. Customs agents have the exclusive right to search anything they deem fit so long as it's entering U.S. territory (and i think we all know that.. that's the part of this game that makes us the most nervous).. But once a watch is on your wrist and has PASSED through customs.. there's no way any customs official could ever touch it. Unless it's explicityly obvious that the item could not have been manufactured or produced within the united states and there's evidence that the item was smuggled. In which case, counterfeiting cases are dealt with by the FBI in the U.S. A counterfeit item alone by itself cannot be considered contraband since it is not a 'prohibited' item unless being smuggled... Some counterfeit watches even pass through customs and are taxed as real watches, with their unsuspecting buyers paying full tarrifs for a watch that isn't even real.
So the facts still remain.. An authorised dealer cannot (at least legally) simply confiscate a watch you are wearing, but a customs officer certainly can, as long as it's not in your possession and it's crossing the border. (possession does not mean paid for)..