E.I. DuPont De Nemours & Co. v. United States (561 F. Supp. 2d 1320, 2008)

OPINION

STANCEU, Judge.

Plaintiff E.I. du Pont de Nemours & Company (“DuPont”) moves for summary judgment, contending that the U.S. Customs Service (“Customs”) unlawfully denied DuPont a portion of a refund (“drawback”) of duties that DuPont had paid on imported merchandise. DuPont brought this action to contest the denial by Customs of its protest of the reliquidation of its entry seeking “manufacturing substitution drawback” under 19 U.S.C. § 1313(b) (Supp. V 1993). The decision Customs made upon reliquidation had the effect of limiting the duty refund to an amount that is approximately 55% of the amount of drawback DuPont had claimed. Defendant United States, in a cross-motion for summary judgment, submits that the Customs determination upon reliquidation of the drawback entry was correct. The court grants summary judgment in favor of defendant.

I. Background

The “manufacturing drawback” procedures of the customs laws of the United States allow a refund, or “drawback,” of 99% of the duties paid on imported merchandise, upon the exportation of products (“articles”) manufactured or produced in the United States with the use of the imported merchandise. See 19 U.S.C. § 1313(a). This drawback, as authorized by subsection (a) of 19 U.S.C. § 1313, is known as “manufacturing direct identification drawback.” Under subsection (b) of that section, an importer also may obtain drawback even if the specific imported merchandise on which the claim for a duty refund is made was not used in manufacturing the articles that were subsequently exported. See id. at § 1313(b). Under this “manufacturing substitution drawback” procedure, other merchandise, whether imported or domestic, may be substituted for the imported, duty-paid merchandise that is the subject of the claim for drawback, provided the manufacturer or producer of articles uses the imported, duty-paid merchandise and the substituted merchandise in the manufacturing or production of “such articles” within three years of receipt of the imported, duty-paid merchandise, and provided the substituted merchandise is of the “same kind and quality” as the imported, duty-paid merchandise. See id. Where all requirements for manufacturing substitution drawback are satisfied, the statute provides for payment of “an amount of drawback equal to that which would have been allowable had the merchandise used therein been imported.” Id.

The facts concerning DuPont’s manufacturing process and its drawback entry that the court has found relevant to the disposition of this case and found to be uncontested, as discussed in this Opinion, are set forth in the various pleadings and exhibits thereto. See Compl. ¶¶ 4-13, Ex. A; Mem. in Supp. of Mot. for Summ. J. of Pl. E.I. DuPont de Nemours & Company (“Pl.’s Mem.”), Ex. 2; Pl.’s Statement of Material Facts Not in Dispute (“Pl.’s Statement of Material Facts”); Def.’s Resp. to Pl.’s Statement of Material Facts as to which There Are No Genuine Issues to Be Tried (“Def.’s Statement of Material Facts”); Def.’s Statement of Additional Material Facts as to which There Are No Genuine Issues to Be Tried (“Def.’s Statement of Additional Material Facts”); Pl.’s Resp. to Def.’s Statement of Additional Material Facts as to which There Are No Genuine Issues to Be Tried (“Pl.’s Resp. to Def.’s Statement of Additional Material Facts”).

A. Manufacturing Process on which DuPont’s Drawback Entry Was Based

DuPont sought drawback of duties it had paid on a quantity of “synthetic ru-tile,” which is a processed ore that DuPont imported for the titanium contained within the ore. Compl. ¶ 6. Synthetic rutile is produced by subjecting ilmenite ore, a naturally-occurring ore containing crystalline titanium dioxide and oxides of iron, to processing that removes the iron oxide to increase the concentration of titanium dioxide. Id. Ex. A ¶ 8. DuPont used the synthetic rutile in manufacturing its “Ti-Pure” brand pigments. The pigments contain titanium dioxide, which imparts opacity to paints and other coatings. Id. ¶ 5.

DuPont used four different imported and domestic raw materials, referred to as “feedstocks,” to obtain the titanium it required for manufacturing the titanium dioxide used in its pigments. Id. ¶ 6. Only one of the four feedstocks DuPont used was synthetic rutile. Id. ¶ 6, Ex. A ¶ 8. DuPont also used as feedstocks ilmenite and rutile, which are naturally-occurring ores. Id. Rutile consists largely of crystalline titanium dioxide. The fourth feedstock DuPont used was titanium slag, which is a synthetic form of crystalline titanium dioxide produced by processing ilmenite to remove iron oxides. Id. None of these feedstocks consisted of or contained pure titanium metal; each contained titanium dioxide in varying proportions and also contained other substances that were separated out as waste during the titanium dioxide production process. See id. ¶¶ 6-7, Ex. A ¶ 8; Pl.’s Statement of Material Facts ¶¶ 2-4.

B. Procedural History of DuPont’s Drawback Entry

In the drawback entry at issue in this case (Entry No. G82-0000542-5), filed with Customs on December 6, 1991, DuPont based its claim for drawback on 6,961,934 pounds of Ti-Pure titanium dioxide pigment (identified by DuPont as “TiPure R-960”) that had been exported during a period beginning in December 1988 and continuing through March 1989. Compl. ¶¶ 8-9, Ex. A-6. On the drawback entry form, DuPont designated for drawback 6,762,693 pounds of Australian-origin, duty-paid synthetic rutile that had been imported in April 1986 and used by DuPont in manufacturing during a period beginning in April 1986 and concluding in December 1987. Id. Ex. A-6. DuPont claimed drawback of $37,540 in duties paid on imported synthetic rutile. DuPont sought to use the substitution drawback procedure on the assertion that its feed-stocks were of the “same kind and quality” as the designated imported synthetic ru-tile. Id. ¶ 8.

Customs, upon liquidating Drawback Entry No. G82-0000542-5, denied all drawback on the ground that no drawback contract had been approved by Customs. Compl. ¶¶ 9-10, Ex. A ¶ 13. After Customs denied DuPont’s protest of the liquidation on the ground that the designated synthetic rutile and the substituted feed-stocks were not of the same kind and quality and on additional grounds, DuPont contested the protest denial in the Court of International Trade. Compl. ¶ 10-11, Ex. A. In E.I. du Pont de Nemours & Co. v. United States, 24 CIT 1045, 116 F.Supp.2d 1343 (2000) (“du Pont I”), the Court of International Trade held that DuPont was entitled to manufacturing substitution drawback. The Court of International Trade therefore granted DuPont’s motion for summary judgment and ordered Customs to approve DuPont’s proposed drawback contract, to reliquidate the drawback entry, and to “pay DuPont’s drawback claim in accordance with this decision.” du Pont I, 24 CIT at 1051, 116 F.Supp.2d at 1350.

Upon reliquidating the drawback entry on July 13, 2001, Customs paid DuPont drawback in the amount of $20,839.63. Compl. ¶ 12, Ex. D. Upon DuPont’s protest of the reliquidation, Customs headquarters issued a ruling ordering the Director of the Port of Elizabeth, New Jersey to deny the protest. [¶] 229433 (May 10, 2002), available at 2002 WL 1584373; Compl. Ex. E (setting forth the protest denial and [¶] 229433, the headquarters ruling that accompanied the denial); Def.’s Mem. Ex. A (also setting forth [¶] 229433). In the ruling, Customs reached three determinations, the combined effect of which limited DuPont’s drawback to approximately 55% of the amount DuPont had claimed. First, Customs determined that the imported synthetic rutile and the feedstocks substituted for it were not of the “same kind and quality” for purposes of manufacturing substitution drawback. [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *l-*2. Second, Customs regarded the element titanium, which was obtained from the imported synthetic rutile and the other feedstocks, as the only “merchandise” that was “of the same kind and quality” for which the drawback law permitted substitution. Id. at *2-*3. Third, Customs limited DuPont’s drawback based on what it calculated to be the duty paid on the titanium content of the quantity of imported synthetic rutile for which DuPont substituted the various feedstocks that appeared, in the form of titanium, in the exported TiPure pigment, instead of the entire duty that DuPont paid on that quantity of imported synthetic rutile. Id. at *3-*4. To make this calculation, Customs divided the atomic weight of titanium by the molecular weight of titanium dioxide and multiplied that percentage, .5993, by the percentage by weight of synthetic rutile that consists of titanium dioxide, .917. Id. at *5. The product of the two percentages was approximately 55%; on this basis, Customs determined that DuPont’s drawback should be limited to approximately 55% of the drawback claimed. See id; Pl.’s Mem. 7. In effect, Customs allocated the remaining 45% of the claimed drawback to the non-titanium content of the imported synthetic rutile, which DuPont describes as valueless waste and which appeared neither in the TiPure pigment nor in any other product of DuPont’s manufacturing operation. See Pl.’s Mem. 12-13; Pl.’s Supplemental Mem. in Supp. of Mot. for Summ. J. 2-9 (“Pl.’s Supplemental Mem.”).

The protest denial that plaintiff contests in this case occurred on June 14, 2002. Compl. Ex. E. The following month, Customs issued an interim rule amending its procedures governing manufacturing substitution drawback (“Interim Rule”). See Manufacturing Substitution Drawback: Duty Apportionment, 67 Fed.Reg. 48,368 (July 24, 2002) (“Interim Rule”). The Interim Rule, in 19 C.F.R. § 191.26(b)(4)(i), required that “[t]he duty paid on the imported material must be apportioned among its constituent components,” id. at 48,370, and that the “claim on the chemical element that is the designated merchandise must be limited to the duty apportioned to that chemical element on a unit-for-unit attribution.... ” Id. at 48,369. Customs stated that its reason for issuing the Interim Rule was to bring the rules governing manufacturing substitution drawback into accordance with the decision of the United States Court of Appeals for the Federal Circuit (“Court of Appeals”) in International Light Metals, A Division of Martin Marietta Technologies, Inc. v. United States, 194 F.3d 1355 (1999) (“International Light Metals ”), and du Pont I. Id. at 48,369. The Interim Rule, amending the part of the regulations governing recordkeeping for drawback, was made to apply “[i]f the designated merchandise is a chemical element that was contained in imported material that was subject to an ad valorem rate of duty, and a substitution drawback claim is made based on that chemical element.” Id. at 48,370 (codified at 19 C.F.R. § 191.26(b)(4) (2003)). Plaintiff filed its summons on November 8, 2002 and its complaint on November 22, 2002.

On August 22, 2003, following a period for public comment, Customs adopted the Interim Rule as a final rule (“Final Rule”) without substantive change. See Manufacturing Substitution Drawback: Duty Apportionment, 68 Fed.Reg. 50,700 (Aug. 22, 2003) (“Final Rule ”). In response to comments urging apportionment by value instead of weight, Customs stated that “the courts in both [International Light Metals ] and du Pont [I] require apportionment by relative weight.” Id. at 50,-701. As did the Interim Rule, the Final Rule contained a single example to illustrate the new requirement of apportionment by relative weight. That example was based principally on the facts of DuPont’s drawback entry. See id. at 50,703; Interim Rule, 67 Fed.Reg. at 48,370.

C. Voluntary Dismissal of Plaintiffs Claim Pertaining to the Judgment in DuPont I

As originally filed, the complaint in this case included a claim (“Count I”) stating as follows: “This Court’s ruling in du Pont I directed Customs to pay the full amount of the drawback claim in Entry No. G82-0000542-5. Customs’ failure to do so is contrary to law.” Compl. ¶ 14. With the consent of the parties, the court entered an order on March 3, 2006 designating Count I as a separate case (Court No. 06-00055). The new case was dismissed on May 16, 2006 after both parties voluntarily stipulated for dismissal pursuant to US-CIT Rule 41(a)(1)(B).

II. Discussion

This court exercises jurisdiction under 28 U.S.C. § 1581(a) (2000). Summary judgment is awarded “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” USCIT R. 56(c).

DuPont’s first argument is that the Court of International Trade in du Pont I ordered Customs to pay DuPont’s drawback claim and did not authorize Customs to develop new reasons not to do so. Pl.’s Mem. 9. “Well-established principles of res judicata prevent Customs from refusing to reliquidate and pay in full the drawback claim that was before the Court in du Pont /.” Id. According to plaintiff, “Customs’ refusal to reliquidate the entry at the requested amount is nothing more than an attempt to relitigate the claim presented in du Pont I by asserting a defense that it could have raised and litigated there.” Id. at 10. Second, in the alternative, DuPont argues that the drawback statute does not permit Customs to reduce the amount of its drawback claim by “apportioning” the refund of duties paid on synthetic rutile between the titanium content of the synthetic rutile and the non-titanium content. Id. at 11-19. In support of this argument, DuPont submits that the imported synthetic rutile and the substituted feedstocks are the merchandise that is of the “same kind and quality” for purposes of the manufacturing substitution drawback provision in the statute. Id. at 13-15. Plaintiffs third argument is that if apportionment is authorized by the drawback law, then such apportionment must be based on relative value rather than on relative weight. Id at 19-23.

Defendant counters that if res judicata applies, it applies in favor of its own position because of certain language in the du Pont I opinion that defendant interprets as requiring apportionment of DuPont’s drawback by weight. Def.’s Mem. in Supp. of its Cross-Mot. for Summ. J. and in Opp’n to Pl.’s Mot. for Summ. J. 14-16 (“Def.’s Mem.”). Defendant’s second argument is that the reliquidation of the drawback entry was in accord with the aforementioned Customs regulation requiring, in certain circumstances, duty apportionment by relative weight. Id. at 10-11. Defendant maintains that this court must accord deference to the construction of the drawback statute underlying the regulation, even though the regulation was promulgated after Customs denied the protest leading to this action. Id. at 12-13. Defendant submits that the merchandise of the “same kind and quality” for purposes of the manufacturing substitution drawback provision is confined to the element titanium. Id. at 14. Additionally, defendant argues that “when drawback is claimed on an ‘appearing-in’ basis as it is here, drawback can only be paid on the portion of the merchandise actually appearing in the exported product.” Id. at 18. Defendant argues, further, that because the statute is silent as to the method of apportionment between waste and the sought element, Customs’ interpretation of the statute, under which the apportionment is made based on relative weight and not on relative value, should be upheld. Id. at 24-25. Defendant views the decision by Customs to apportion based on weight, and not value, as “reasonable and administratively reliable.” Id. at 25. Defendant further argues that “even without deference, the method by which Customs calculated the amount payable on DuPont’s drawback claim is consistent with prior judicial precedent, with prior Customs precedent, and with applicable statutory and regulatory provisions.” Id. at 8.

Below, in part A, the court discusses the uncontested facts, concluding that there is no genuine issue as to any fact material to the calculation of the amount of drawback owed to DuPont. The court, in part B, then considers the effect of the res judica-ta principle of claim preclusion on the counts that remain in this litigation following the severance of the first count in the complaint. The court concludes, contrary to plaintiffs argument, that the principle of res judicata does not extinguish the government’s defense to DuPont’s claim that DuPont is entitled to drawback in the full amount. Next, in part C, the court discusses the reasons for its conclusions that du Pont I did not decide the amount of drawback that DuPont is to be paid on its drawback entry but did decide that the designated synthetic rutile and the substituted feedstocks are of the same kind and quality, an issue that defendant may not relitigate here because of the effect of the principle of issue preclusion. In part D, the court concludes that Customs erred in basing its “apportionment” on its “same kind and quality” finding and that the statute, in the manufacturing substitution drawback provision, does not limit DuPont’s drawback according to the proportion of titanium in the synthetic rutile. The court, in part E, rejects defendant’s deference argument pertaining to the Final Rule. In part F, in response to defendant’s argument that [¶] 229438 deserves deference, the court concludes that [¶] 229433 is based on flawed reasoning. The court in part G explains that it is the approved drawback contract and the regulations governing the contract that limit the available drawback. Specifically, the drawback contract confines claims to the appearing-in basis, effectively precluding claims on the used-in basis, and thereby limits the available drawback according to the quantity, by weight, of the designated merchandise or substituted merchandise that appears in the exported TiPure. The court, therefore, denies DuPont’s motion for summary judgment. Finally, in part H, the court concludes that in paying drawback of $20,839.63 on Entry No. G82-0000542-5, Customs paid DuPont drawback in an amount slightly higher than that actually owed and, for this reason, grants defendant’s cross-motion for summary judgment.

A. The Parties Agree on the Facts Material to the Calculation of the Amount of DuPont’s Drawback but Do Not Agree on the Calculation Method

In its complaint in this case, DuPont sought payment of drawback on Entry No. G82-0000542-5 in the amount of $37,547. Compl. ¶ 9. However, DuPont has acknowledged that “[bjecause of an apparent arithmetic error, the correct amount of the drawback claim should have been $37,510” and now seeks summary judgment in that amount. Pl.’s Mem. 6 n. 4. It appears that the error affecting the drawback claim stemmed from a miscalculation of the titanium equivalent of the total imported synthetic rutile and that a similar error affected the reliquidation of the drawback entry. In view of these errors, and to provide context for the legal issues to be decided herein, the court will discuss in detail the undisputed facts upon which it concludes that an award of summary judgment to defendant is the correct disposition of this case.

1. Undisputed, Facts Material to the Calculation of Drawback under Either the Method Advocated by Plaintiff or That Advocated by Defendant

The court notes the following uncontested facts, as stated in the various pleadings, exhibits thereto, the parties’ statements as to material facts filed pursuant to USCIT Rule 56(h), and other submissions in this case. See Compl. ¶¶ 4-13, Ex. A; Pl.’s Mem. 5-7, Ex. 2; Def.’s Mem. & Ex. A; PL’s Statement of Material Facts; Def.’s Statement of Material Facts; Def.’s Statement of Additional Material Facts; Pl.’s Resp. to Def.’s Statement of Additional Material Facts. DuPont’s drawback claim arose from exports of 6,961,934 pounds of TiPure pigments. Compl. ¶ 9, Ex. A-6 at 1; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5. According to the drawback entry, the titanium dioxide content of the TiPure pigments was 89%; the exports therefore contained 6,196,121 pounds of titanium dioxide. See Compl. Exs. A-6 at 1 & E; Def.’s Mem. Ex. A; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5. Because, as the parties agree, the titanium element comprises by atomic weight 59.93% of the molecular weight of the compound titanium dioxide, DuPont’s exported TiPure pigments were the equivalent of 3,713,335 pounds of titanium. See Compl. ¶ 9; Def.’s Mem. 4-5, Ex. A; Def.’s Statement of Additional Material Facts ¶ 3; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5.

The parties also agree that DuPont paid $63,077 in duties on 11,248,972 pounds of imported synthetic rutile, the quantity imported on the single consumption entry on which the duty was paid. Compl. ¶ 9, Exs. A-6 at 1 & C; Def.’s Mem. Ex. A; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5. The 11,248,972 pound quantity contained 10,315,307 pounds of titanium dioxide, based on a 91.7% titanium dioxide content in synthetic rutile. Compl. Exs. A-6 at 1 & C; Def.’s Mem. Ex. A; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5. Applying the 59.93% factor to determine the amount of titanium corresponding to the titanium dioxide yields a titanium equivalent of 6,181,963 pounds in the 11,248,972 pounds of imported synthetic rutile. Compl. Exs. A-6 at 1 & C; Def.’s Mem. 4-5, Ex. A; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5.

Of the 11,248,972 pounds of imported synthetic rutile, DuPont designated 6,762,-693 pounds of synthetic rutile for drawback, an amount shown on the drawback entry (Customs Form 331). See Compl. ¶ 9, Ex. A-6 at 1; Def.’s Mem. Ex. A; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5. Applying the same factors, ie., 91.7% titanium dioxide content in synthetic rutile and 59.93% titanium equivalent in titanium dioxide, produces a titanium equivalent of 3,716,493 pounds in the amount of imported synthetic rutile that DuPont designated for drawback. See Compl. ¶ 9, Exs. A-6 at 1 & C; Def.’s Mem. 4-5, Ex. A; [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *5.

DuPont’s manufacturing of the exported TiPure resulted in waste products due to impurities present in the various feed-stocks, including iron chloride; it is uncontested that DuPont, in some instances, disposed of these waste products but in other instances sold them to other parties. See PL’s Mem. Ex. 2 ¶ 6 (setting forth the declaration of Norman Shurak, dated August 19, 2003) (“Norman Shurak Decl.”); Compl. Ex. A-4 (setting forth the drawback contract and the proposed revisions that the Court of International Trade ordered approved in du Pont I, 24 CIT at 1051, 116 F.Supp.2d at 1350) (“Approved Drawback Contract”). In support of its motion for summary judgment, DuPont has not submitted as an uncontested fact the amount it received for the sale of this waste.

2. The Motion and Cross-Motion for Summary Judgment Differ on the Method By Which Drawback Is Calculated Using the Same Set of Material Facts

Under the method of calculating drawback advocated by DuPont, 60.067% of the total import shipment of synthetic rutile is considered to have been used to produce the quantity of TiPure pigment exported based on the stoichiometric substitution of titanium, ie., substitution on a pound-for-pound basis. Pl.’s Mem. 6-7. The .60067 percentage is obtained by dividing the titanium equivalent of the exported TiPure pigment (as noted above,..3,713,335 pounds) by the titanium equivalent of the total import shipment of synthetic rutile (as corrected, 6,181,963 pounds). Id. at 6. DuPont argues that the drawback is then calculated by applying the .60067 percentage to the duty paid on the synthetic ru-tile, which was $63,077; the result, reduced by the 1% drawback fee, is $37,510. Id.

The agreement between the parties on the material facts is confirmed by use of those same facts by Customs in the headquarters decision which defendant maintains is correct. See [¶] 229433 (May 10, 2002), available at 2002 WL 1584373; Def.’s Mem. 1-5. In [¶] 229433, the Customs ruling directing the Customs officials at the Port of Elizabeth, New Jersey to deny the protest of the reliquidated drawback entry, Customs recalculated DuPont’s drawback claim according to its own method but also, in footnotes, presented a recalculation of the drawback according to the method DuPont advocated in the protest and advocates in this litigation. See [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *6, nn. 1-5. The result of the Customs calculation using DuPont’s method was $37,888. Id. at *6 n. 3. Reduced by the 1% fee, this calculation yields a result in agreement with DuPont’s current position that the correct calculation of its drawback claim is $37,510. See Pl.’s Mem. 6 n. 4.

The method the United States advocates is also based on the stoichiometric substitution of titanium on a pound-for-pound basis but would allow drawback of only 54.9558% of the $37,510 amount of drawback that DuPont now claims. See [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *6, nn. 4-5 (calculating the amount of $20,822 without the 1% reduction, which reduction would further reduce the drawback amount to $20,614). Customs obtained the .549558 percentage by multiplying the percentage of the weight of the imported synthetic rutile that is comprised of titanium dioxide, i.e., 91.7%, by the percentage of the molecular weight of the titanium dioxide molecule that is represented by the atomic weight of the titanium atoms within that molecule, ie., 59.93%. Id. at *6, nn. 1, 4-5. The result of the calculation, $20,822, represents the amount of duty that Customs considers DuPont to have paid on the titanium contained within the quantity of imported synthetic rutile that corresponded, for substitution drawback purposes, to the titanium appearing in the exported TiPure pigments. Id. at *6, n. 5.

Customs allowed $20,839.63 in drawback upon the reliquidation of the drawback entry at issue. Id. at *2. Defendant’s cross-motion for summary judgment seeks dismissal of the case, such that the drawback as determined upon that reliquidation, although slightly higher than defendant considers to be correct, would be allowed to stand. See Def.’s Mem. 26. In response to the protest of the reliquidation, Customs recalculated the drawback, concluding that the $20,839.63 amount was erroneous and that the correct amount of drawback should have been $20,822. [¶] 229433 (May 10, 2002), available at 2002 WL 1584373 at *2, *5. The error, identified in [¶] 229433, was in the determination of the titanium equivalent of the total amount of the imported synthetic rutile. Id. at *5. In reliquidating the entry, Customs used the quantity of 6,176,709 pounds of titanium equivalent instead of the correct titanium equivalent of 6,181,963 pounds, an error [¶] 229433 attributed to the calculation DuPont used to prepare the drawback entry. Id.

B. Because DuPont Is Suing on a New Cause of Action, the Res Judicata Principle of Claim Preclusion Does Not Foreclose the Government’s Defense

DuPont’s first argument in support of its motion for summary judgment is that “[w]ell-established principles of res judica-ta prevent Customs from refusing to reli-quidate and pay in full the drawback claim that was before the Court in du Pont I.” Pl.’s Mem. 9. Specifically, plaintiff relies on the res judicata principle of claim preclusion, arguing that “[ujnder the doctrine of res judicata, or claim preclusion, a ‘judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action.’” Id. (internal citations omitted). Plaintiffs argument essentially is that du Pont I, by operation of the res judicata principle of claim preclusion, forecloses the government’s defense that DuPont is not entitled to the full amount of drawback it is seeking. Id. at 10. Defendant argues that du Pont I actually considered this defense when it considered the issue of apportionment and that du Pont I decided the apportionment issue in defendant’s favor. Def.’s Mem. 15-16.

“Under res judicata, ‘a final judgment on the merits bars further claims by parties or their privies based on the same cause of action.’ ” Brown v. Felsen, 442 U.S. 127, 131, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979) (quoting Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979)). Claim preclusion forecloses relitigation of claims that actually were raised or that could have been raised:

The general rule of res judicata applies to repetitious suits involving the same cause of action.... The rule provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound “not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.”

Comm’r v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 92 L.Ed. 898 (1948) (quoting Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195 (1876)).

Because du Pont I has culminated in a final judgment, the cause of action on which DuPont sued the United States in that case has been merged into the judgment in du Pont I and may not be the subject of a second suit by DuPont against the United States on that same cause of action. See Restatement (Second) of Judgments § 18 (1982) (setting forth “Judgment for Plaintiff-The General Rule of Merger” and stating that “[wjhen a valid and final personal judgment is rendered in favor of the plaintiff: (1) The plaintiff cannot thereafter maintain an action on the original claim or any part thereof, although he may be able to maintain an action upon the judgment; and (2) In an action upon the judgment, the defendant cannot avail himself of defenses he might have interposed, or did interpose, in the first action.”). DuPont could obtain a remedy on its previous cause of action only by suing on the judgment entered in du Pont I. See id. As originally filed, plaintiffs complaint included Count I, which asserted that “[tjhis Court’s ruling in du Pont I directed Customs to pay the full amount of the drawback claim in Entry No. G82-0000542-5. Customs’ failure to do so is contrary to law.” Compl. ¶ 14. Count I reasonably could be construed as seeking enforcement of the judgment in du Pont I. With the consent of the parties, the court severed this count from the other two counts in the complaint and designated it as a separate case. That case subsequently was dismissed by stipulation of the parties under USCIT Rule 41(a)(1)(B).

Claim preclusion does not occur where the parties are identical but the cause of action in the second suit is not the same as that involved in the first suit. Therefore, to resolve the competing res judicata arguments the parties have presented, the court first must determine whether DuPont, in bringing its action against the United States according to the remaining counts in its complaint, is now suing on the same cause of action on which it sued the United States in du Pont I. The court concludes that because the instant matter arises out of a different group of transactional facts than those on which DuPont sued in du Pont I, this case must be considered to bring a new cause of action.

Count II of the complaint alleges that in reliquidating the drawback entry, Customs acted inconsistently with the drawback statute in apportioning the duties DuPont paid on the designated portion of the imported synthetic rutile and thus reducing DuPont’s drawback. Compl. ¶¶ 15-16. Count III alleges that if any apportionment was lawful, it was required by the drawback statute to be accomplished according to relative value, and not according to relative weight as Customs did in reliquidating the drawback entry. Id. ¶¶ 17-18. Counts II and III (ie., the remaining counts) in the complaint contest the administrative decision that Customs made in denying the protest DuPont filed in response to the reliquidation of its drawback entry. That administrative decision, and events surrounding it, are essential to plaintiffs invoking the court’s jurisdiction. These events followed the decision in du Pont I and the reliquidation of the drawback entry by Customs in response to the judgment entered in that case and include DuPont’s protest of the reliquidation, issuance by Customs headquarters of HQ 229438 (which directed the Port of Elizabeth to deny the protest and explained the reasons for the headquarters decision), and a denial of the protest by the Port Director for Elizabeth in accordance with HQ 229433. See Compl. Exs. B-E. Thus, du Pont I, although involving the same drawback entry as this case, arose from a judicial challenge to a different administrative determination by Customs, ie., the denial of the protest DuPont filed to contest the original liquidation of the drawback entry at zero drawback. The group of transactional facts on which this case was brought differ in these respects from the facts that gave rise to du Pont I.

Where the transactional or operative facts in two cases differ as they do here, the causes of action in those two cases are not the same. See Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1362-64 (Fed.Cir.2000) (concluding that the same cause of action can exist in two cases only where the same set of transactional facts are involved in those cases and that, where the transactional facts differ, the doctrine of claim preclusion does not apply); Young Eng’rs Inc. v. Int’l Trade Comm., 721 F.2d 1305, 1314 (Fed.Cir.1983) (stating that claim preclusion prevents the “assertion of the same transactional facts in the form of a different cause of action or theory of relief.”); Black’s Law Dictionary 235 (8th ed.2004) (stating that a “cause of action” is “1. [a] group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person; CLAIM_”). In raising its defense in this case, the government is not collaterally attacking the judgment entered in du Pont I. Cf. Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320, 1324 (Fed.Cir.2008) (citing Restatement (Second) of Judgments § 18(2) (1982) and noting that a defense that could have been interposed in the first action cannot later be used to collaterally attack the judgment resulting from the first action). In summary, because the two remaining counts in DuPont’s complaint involve a different cause of action from that upon which DuPont sued in du Pont I, the res judicata doctrine of claim preclusion does not foreclose the government’s defense that Customs acted lawfully in limiting DuPont’s drawback payment as it did.

C. Issue Preclusion: DuPont I Did Not Decide the Amount of Drawback that DuPont Should Be Paid on its Drawback Claim But Decided the Issue of “Same Kind and Quality ”

Where the parties are the same but the cause of action is not the same as that asserted in the original suit between those parties, the principle of “issue preclusion,” also referred to as “collateral estoppel,” applies to foreclose relitigation of issues actually litigated and decided in the prior case.

Since the cause of action involved in the second proceeding is not swallowed by the judgment in the prior suit, the parties are free to litigate points which were not at issue in the first proceeding, even though such points might have been tendered and decided at that time. But matters which were actually litigated and determined in the first proceeding cannot later be relitigated.

Comm’r v. Sunnen, 333 U.S. at 598, 68 S.Ct. 715. The doctrine of issue preclusion applies to disallow relitigation of issues of law and issues of fact. As the Supreme Court has explained, “[ujnder collateral es-toppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case.” Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (citing Montana, 440 U.S. at 153, 99 S.Ct. 970). The principle of issue preclusion requires that the court determine which, if any, of the issues decided in DuPont I are also issues raised by this case.

1. DuPont I Did Not Decide the Amount of Drawback that DuPont Should Be Paid on its Drawback Claim

According to plaintiffs arguments, among the issues decided in du Pont I was the amount of drawback that DuPont was to be paid. Plaintiff points out that its complaint in du Pont I specified the exact amount of money it sought on its drawback entry. Pl.’s Mem. 9. DuPont Court No. 02-00737 Page 22 argues that du Pont I “remanded to Customs the same drawback entry that is the subject of this litigation, with the instruction that the agency ‘approve the proposed drawback contract ..., reliquidate the drawback entry, and pay DuPont’s drawback claim in accordance with this decision.’ ” Id. at 9 (quoting du Pont I, 24 CIT at 1051, 116 F.Supp.2d at 1350). Defendant disagrees with DuPont’s analysis of du Pont I, arguing essentially that if issue preclusion applies, it applies in favor of the position of the United States. Def.’s Mem. 14-16. According to defendant’s argument, du Pont I decided that DuPont’s drawback must be limited by apportioning the duty paid between the titanium content of the synthetic rutile and the other elements contained in the synthetic rutile. Id. at 16.

Each of the parties supports its argument for summary judgment by citing passages from the du Pont I opinion. However, the court concludes from that opinion that the holding of du Pont I is narrower than that presumed by the arguments of either party, du Pont I settled in the affirmative the question of whether substitution drawback was available on Entry No. G82-0000542-5. du Pont I did not decide the issue of the actual amount of drawback that DuPont was owed and did not decide the method by which the drawback must be calculated. Instead, du Pont I left the calculation of the amount of drawback to be determined by Customs upon the reliquidation of the drawback entry.

Although the du Pont I opinion mentions the amount of the drawback claim, $37,540, it does so only in presenting the background of the case. See du Pont I, 24 CIT at 1046, 116 F.Supp.2d at 1345. The holding in du Pont I is not directed to the specific issue of how DuPont’s drawback is to be calculated. Instead, the opinion introduces the issue to be decided as follows: “At issue is DuPont’s entitlement under 19 U.S.C. § 1313(b) to a drawback upon exportation from December 1988 through March 1989 of 60 shipments of ‘Ti-Pure R-960’ titanium dioxide pigment manufactured in the United States.” Id. at 1045, 116 F.Supp.2d at 1344-45. The text of the opinion that follows is directed almost entirely to the issue of whether, under the factors discussed in International Light Metals, the “same kind and quality” requirement of 19 U.S.C. § 1313(b) precludes drawback because of the physical differences between synthetic rutile and the three other products used as feed-stocks and because of the resulting differences in the manufacturing process. Id. at 1048-51, 116 F.Supp.2d at 1347-50.

The sole passage in the du Pont I opinion that mentions the method of calculating drawback lends further support to the conclusion that du Pont I refrained from deciding the amount of drawback, intending instead that Customs was to calculate the drawback upon reliquidating the drawback entry. The passage reads as follows:

The Government, as something of an afterthought, asserts that a ruling in favor of DuPont would place an undue burden on Customs because of the difficulty involved in calculating the proper amount of DuPont’s drawback. According to the Government, the rate of duty on the imported merchandise for which drawback is claimed (synthetic rutile) was an ad valorem rate on the value of the ore, rather than on the value of the titanium content. The Government argues that any drawback would entail the difficult task of apportioning the duty paid between the synthetic rutile’s titanium content and the other elements contained therein. However, since the uncontroverted Manufacturing Drawback Certificate [ (the drawback entry form)] contains the necessary percentages for making the calculation, this burden would not seem to be a sufficient reason for denying DuPont its relief.

Id. at 1049-50, 116 F.Supp.2d at 1348-49 (emphasis added and internal citations omitted). If, as plaintiff argues, the Court of International Trade in du Pont I had intended to direct Customs to pay DuPont $37,540, then the above-quoted passage would not have mentioned “the necessary percentages for making the calculation” in response to the government’s claimed “difficulty involved in calculating the proper amount of DuPont’s drawback.” Id. at 1050, 116 F.Supp.2d at 1348-49. Were DuPont correct in its interpretation of the holding in du Pont I, the calculation of “the proper amount of DuPont’s drawback” already would have been made and decided by the Court of International Trade as part of the holding in the case. The above-quoted passage is inconsistent with any such interpretation of that holding, which must be ascertained from the du Pont I opinion as a whole. The court concludes from this passage, and from the absence of discussion of the calculation of drawback in the remainder of the opinion, that du Pont I did not decide “the proper amount of DuPont’s drawback.”

The court is not convinced by plaintiffs argument that the Court of International Trade in du Pont I intended to award summary judgment in the amount of $37,540 because that was the amount of drawback sought in DuPont’s summary judgment motion. Nothing in the du Pont I opinion so states. Nor is du Pont I correctly interpreted as an award of partial summary judgment under USCIT Rule 56(d); had it been such an award, the court would have identified controverted facts. See USCIT R. 56(d). Instead, du Pont I is correctly construed to award a judgment based on the absence of a genuine issue of material fact, and also to require Customs to make, “in accordance with this decision,” an additional administrative determination of the exact amount of drawback to be paid upon the reliquidation of the drawback entry, on the basis of the uncontroverted facts, du Pont I, 24 CIT at 1051, 116 F.Supp.2d. at 1350. The Court of International Trade in du Pont I specifically identified, among those uncon-troverted facts, the information presented on the drawback entry form that Customs would require were Customs to allocate “the duty paid between the synthetic ru-tile’s titanium content and the other elements contained therein.” Id. at 1050,116 F.Supp.2d at 1348. That information would have been irrelevant, and no such allocation could have occurred, had du Pont I considered DuPont to qualify for drawback in the full amount claimed in DuPont’s motion for summary judgment. Although du Pont I decided, according to USCIT Rule 56(c), that DuPont was “entitled to a judgment as a matter of law,” the judgment to which DuPont was entitled was a judgment directing Customs to reli-quidate the drawback entry in accordance with the opinion in that case, and to approve the proposed drawback contract, not a judgment directing Customs to pay DuPont, upon reliquidation of the entry, an amount of drawback that the Court of International Trade had determined or intended. See USCIT R. 56(c) (emphasis added); see also du Pont I, 24 CIT at 1047-48, 1051, 116 F.Supp.2d at 1346-47, 1350.

The court also must reject defendant’s argument that under du Pont I Customs was required to award drawback in an amount reduced according to the percentage content of titanium in synthetic rutile. See Def.’s Mem. 14-16. The opinion in du Pont I does not state such a holding. The only sentence in the opinion that touches upon the general topic of a reduced amount of drawback is the following, from the passage quoted above: “However, since the uncontroverted Manufacturing Drawback Certificate contains the necessary percentages for making the calculation, this burden would not seem to be a sufficient reason for denying DuPont its relief.” du Pont I, 24 CIT at 1050, 116 F.Supp.2d at 1348-49; see Def.’s Mem. 16. This sentence does not support defendant’s conclusion that du Pont I decided the specific way that DuPont’s drawback was to be calculated upon reliquidation of the entry. The context of the sentence is not the statement of the holding of the case but is instead a refutation of the government’s argument that the difficulty of such a calculation was a barrier to DuPont’s obtaining any drawback.

In summary, the issue of the amount of drawback was not decided by du Pont I. As discussed below, however, issue preclusion forecloses defendant’s argument that only titanium can be considered to be of the “same kind and quality.” To the contrary, du Pont I decided that synthetic rutile and the other three feedstocks are of the “same kind and quality” and therefore are substitutable for drawback purposes.

2. Defendant Is Precluded from Contesting the Determination in DuPont I that the Imported Synthetic Rutile and the Substituted Feedstocks Were of the Same Kind and Quality

The parties disagree as to what constitutes the “merchandise” that is of the “same kind and quality” within the meaning of the manufacturing substitution drawback provision, 19 U.S.C. § 1313(b). Plaintiff asserts that the synthetic rutile and the other three feedstocks are all of the same kind and quality for manufacturing substitution drawback purposes. Pl.’s Mem. 7, 13. Although the government agrees that DuPont is entitled to drawback as a result of the judgment in du Pont I, the government maintains that titanium, and only titanium, satisfies the same-kind and-quality requirement of the statute. Def.’s Mem. 18 (stating that “[bjecause Section 1313(b) permits drawback only on imported and substituted merchandise of the ‘same kind and quality’ and, in this case, that is the titanium, the drawback payable to DuPont must be measured by the titanium content only.”). The court concludes that du Pont I, in ruling that DuPont was entitled to manufacturing substitution drawback, determined that the imported, designated synthetic rutile and the substituted feedstocks satisfy the “same kind and quality” requirement as set forth in 19 U.S.C. § 1313(b). Therefore, while the government’s defense is not precluded by res judicata, the principle of issue preclusion does not permit defendant to relitigate the issue of whether the four feedstocks satisfy the same-kind-and-quality requirement of 19 U.S.C. § 1313(b).

The government interprets the decision of the Court of International Trade in du Pont I and the decision of the Court of Appeals in International Light Metals to hold that only titanium satisfied the same-kind-and-quality requirement of 19 U.S.C. § 1313(b). In so doing, the government misconstrues the holdings in both cases. The decision in du Pont I was based in part on the decision of the Court of Appeals in International Light Metals, which was decided while the issue of whether DuPont was entitled to manufacturing substitution drawback on Drawback Entry No. G82-0000542-5 was pending in du Pont I. International Light Metals did not hold that, of the imported titanium sponge and substituted titanium scrap, only titanium qualified as the “same kind and quality.” As it stated twice in its opinion, the Court of Appeals in International Light Metals was deciding the question of whether 19 U.S.C. § 1313(b) allowed titanium alloy scrap, which consisted of titanium (of at least 99.3% purity) and other elements, to be substituted for imported titanium “sponge,” which consisted of commercially pure titanium (of at least 99.3% purity). See Int’l Light Metals, 194 F.3d at 1363 (stating that “[t]he issue before us is whether, under 19 U.S.C. § 1313(b), ILM was entitled to a contract permitting drawback upon substituting titanium alloy scrap for titanium sponge.”); id. at 1364 (identifying the question before the Court of Appeals as “whether, under 19 U.S.C. § 1313(b), titanium-containing scrap may be substituted for titanium sponge.”).

The issue had arisen after the importer, International Light Metals, Inc. (“ILM”), sought and obtained from Customs approval of a proposed contract for manufacturing substitution drawback. Id. at 1358. The approved drawback contract allowed ILM, a manufacturer and exporter of titanium alloy products, to import titanium sponge and substitute for it domestic titanium sponge meeting the same level of purity. Id. After Customs approved ILM’s drawback contract, ILM began obtaining the titanium for manufacturing from a second source, domestic titanium alloy scrap. Id. The presence in the scrap of elements other than titanium did not prevent ILM from using the scrap in its manufacturing process; to the contrary, the alloying process made use of some of these elements. Id. at 1358-59. However, the use of the large solid pieces of scrap necessarily altered the manufacturing process. Id.

Customs discovered in an audit that ILM, by using the scrap as the second source of titanium, had departed from the process Customs had approved in the drawback contract. Id. Although the applicable regulations allowed drawback to be claimed upon a drawback contract that was amended retroactively, Customs denied, on two grounds, ILM’s application for an amended drawback contract. Id. at 1359-60, 1362-63. The principal ground was a conclusion by Customs that the imported titanium sponge and the substituted titanium alloy scrap were not of the “same kind and quality” for substitution drawback purposes. Id. at 1362-63. Second, Customs noted the additional time required for the manufacturing process, i.e., forty hours of manual welding as opposed to six hours of automatic welding, when ILM used the large solid pieces of alloy scrap as opposed to the sponge. Id. at 1358, 1363.

ILM relied on Treasury Decision (“T.D.”) 82-36, a 1982 administrative decision, in arguing that the titanium sponge and the titanium alloy scrap it used were of the “same kind and quality.” Id. at 1359; see T.D. 82-36, 16 Cust. B & Dec. 97, 97-98 (1982). Customs, in the audit report, rejected this argument, concluding that T.D. 82-36 allowed substitution drawback only if no more than one “sought” element is contained in the domestically produced product and if substitution does not significantly alter the manufacturing process. Int’l Light Metals, 194 F.3d at 1359. Customs denied ILM’s drawback claims for which the substituted merchandise was titanium scrap, reasoning that the scrap contained sought elements other than titanium that were used in manufacturing the alloys. Id. With respect to the large solid pieces of scrap, Customs also concluded that T.D. 82-36 would not permit drawback because the forty hours of manual welding required for scrap as opposed to the six hours of automatic welding for sponge represented a significant change in the manufacturing process. Id. at 1358-59, 1363.

The Court of Appeals, reversing a decision of the Court of International Trade, rejected the position of the United States. Concluding that the titanium alloy scrap could be substituted for the titanium sponge, the Court of Appeals found three points to be compelling:

First, it is undisputed that the titanium in the scrap was identical to the titanium in the sponge that ILM imported. Accordingly, the titanium in the domestic scrap was “of the same kind and quality” as the titanium in the imported sponge. Second, there is no dispute as to the amount of titanium that was in the scrap. As a result, the amount of a drawback to which ILM would be entitled based upon the titanium in that scrap and the titanium in the imported sponge could be precisely determined.

Third, the government’s position results in a “no scrap” rule, one for which we find no support in the statute. To explain, if ILM used imported or substituted domestic titanium sponge to make an alloy ingot from which exported articles were made, under the government’s theory ILM would get a drawback duty for the amount of titanium sponge found in the exported articles. But if the manufacturing process resulted in waste (scrap), or ILM used scrap irom other sources, and ILM recycled the scrap into alloy ingots from which more articles for export were made, then no drawback would be paid for the amount of titanium sponge in the articles made from the “scrap” ingots, even if, as is the case here, the amount of titanium sponge in the scrap could be accurately determined. If, however, ILM first expended the time and money to extract the titanium sponge from the scrap, then mixed the extract with other metals to form ingots from which exported articles were made, the government would allow drawback.

Id. at 1366. Regarding the longer welding time required for scrap, the Court of Appeals found that the difference in welding time (forty hours for scrap as opposed to six hours for sponge) was not significant in the context of a process that takes two to three months to complete. Id.

Defendant points to certain of the above-quoted language in the opinion of the Court of Appeals for the proposition that only titanium qualifies as being of the same kind and quality. See Def.’s Mem. 21 (quoting Int’l Light Metals, 194 F.3d at 1366). In setting forth the three points that the Court of Appeals found compelling in concluding that the titanium alloy scrap could be substituted for the titanium sponge, the Court of Appeals stated that “it is undisputed that the titanium in the scrap was identical to the titanium in the sponge that ILM imported” and that “[a]c-cordingly, the titanium in the domestic scrap was ‘of the same kind and quality’ as the titanium in the imported sponge.” Int’l Light Metals, 194 F.3d at 1366. Defendant reads this language to mean that ILM’s drawback claim was limited by a finding that only the titanium was of the same kind and quality. Defendant’s reading of the opinion, however, is overly selective, overlooking the fact that the Court of Appeals was considering the issue of whether ILM’s proposed drawback contract was consistent with 19 U.S.C. § 1313(b). That proposed contract depended on the substitution of titanium scrap for titanium sponge, not titanium for titanium.

The Court of Appeals concluded that ILM’s proposed drawback contract was consistent with 19 U.S.C. § 1313(b), which necessarily required it to conclude that the substituted merchandise, the titanium scrap, was of the same kind and quality as the imported, duty-paid merchandise, the titanium sponge. See id. at 1367. The Court of Appeals relied on the legislative history of the substitution drawback provision to resolve the substitution issue, for which it viewed the “same kind and quality” phrase, standing alone, as insufficiently precise. Id. at 1364-66.

Specifically, the unchanged purpose of section 1313(b) ... was to facilitate honest drawback claims for such stable commodities as sugar, which present fungibility difficulties, i.e., difficulties in accounting for whether the imported merchandise has actually been used in the particular article. We therefore inform our understanding of the phrase “same kind and quality” with the concern expressed in the legislative history about alleviating difficulties of proof in honest drawback cases.

Id. at 1366.

Contrary to defendant’s interpretation of International Light Metals, the fact that titanium in the sponge and in the scrap, being essentially identical, was of the “same kind and quality” served as one of the three reasons the Court of Appeals gave for its conclusion that ILM was entitled to drawback based on substitution of titanium scrap for titanium sponge. Later in the opinion, the Court of Appeals stated that “[w]e thus conclude that ILM’s proposal for a revised drawback contract was consistent with the requirements of 19 U.S.C. § 1313(b) because the titanium alloy scrap that ILM used in its manufacturing process contained titanium that was, in the words of the statute, ‘of the same kind and quality’ as the titanium it imported.” Id. at 1367. This language, which references ILM’s proposed drawback contract, cannot properly be interpreted to disregard the fact that the proposed drawback contract was based on substitution of titanium scrap for titanium sponge, not on the substitution of titanium for titanium. The language neither states nor implies that the Court of Appeals considered the same-kind-and-quality requirement to be met only by the titanium.

The government’s reasoning that the substitution drawback statute, as construed by the Court of Appeals in International Light Metals, limits DuPont’s drawback by confining the same-kind-and-quality merchandise to titanium is also unconvincing because of a difference in the facts between the two cases. The designated merchandise in International Light Metals was titanium; specifically, it was titanium sponge, a commercially pure form of titanium with a minimum titanium content of 99.3%. Id. at 1357, 1360. In contrast, the designated merchandise in this case is synthetic rutile, not titanium. The drawback entries of ILM that Customs had approved prior to the litigation had substituted titanium sponge for titanium sponge, i.e., titanium for titanium. With respect to the entries requiring a revised drawback contract that Customs had disallowed, the Court of Appeals was faced with the question of whether the presence of substances other than commercially pure titanium in the substituted merchandise, including other sought elements, was a reason to conclude that the titanium scrap did not qualify as substituted merchandise. These substances were not present in the designated merchandise. Under the holding in International Light Metals, the presence of these other substances in the substituted merchandise was no bar to drawback, and accordingly a drawback contract based on the use of the scrap as substituted merchandise was held to be permissible under the statute. See id. at 1366-67. According to the question presented upon appeal, either the scrap was substitutable for the designated titanium sponge or it was not. On the facts of International Light Metals, the Court of Appeals was not required to decide whether only the titanium in the scrap satisfied the same-kind-and-quality requirement and did not so decide.

du Pont I is properly interpreted to hold that the imported synthetic rutile and the four substituted feedstocks (only one of which was synthetic rutile) satisfy the same-kind-and-quality requirement. DuPont I arose after Customs, upon effecting the original liquidation of the drawback entry in 1996, had refused to allow DuPont any drawback on the drawback entry and had rejected DuPont’s amended proposal for a drawback contract. Compl. ¶¶ 11-13. Upon liquidation, Customs, maintaining the position it had taken twice previously in rejecting DuPont’s original and amended proposals for a drawback contract, held that DuPont was entitled to no drawback because, according to Customs, DuPont’s imported synthetic rutile and substituted feedstocks were not of the “same kind and quality” as required for manufacturing substitution drawback under 19 U.S.C. § 1313(b). See id. Exs. A-1 to A-6. Customs had reached this decision by concluding that DuPont’s proposed drawback contract did not meet the requirements of T.D. 82-36 “because titanium was never isolated as an element during DuPont’s manufacturing process.” du Pont I,