I agree with Nick that the seller is of low character. I was raised differently—a deal is a deal.
Is he the original owner, or did he recently purchase/acquire this watch from a third party?
In my opinion, you will have a difficult time enforcing your claim. While you had an agreement and made a pledge to pay, the full funds (as I understand) are not yet in the hands of the seller...only the deposit. You may have a hard time proving how you’ve been damaged if he unwound the deal and both of you are “whole”. As others have noted, even if you were to win, it would be a Pyrrhic victory as you’ll spend way more for your victory than the current market value of the watch—plus it will take you years to work your watch through our court system (ask me how I know!!).
In any case, I wish you luck and sorry for your troubles.