E.I. Du Pont De Nemours & Co. v. U.S.
| Decision Date | 27 May 2008 |
| Docket Number | Slip Op. 08-56. Court No. 02-00737. |
| Citation | 561 F.Supp.2d 1320 |
| Parties | E.I. DUPONT DE NEMOURS & COMPANY, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
STANCE U. 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.1 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.
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").
DuPont sought drawback of duties it had paid on a quantity of "synthetic rutile," 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.
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 feedstocks were of the "same kind and quality" as the designated imported synthetic rutile. 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 feedstocks 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. HQ 229433 (May 10, 2002), available at 2002 WL 1584373; Compl. Ex. E (setting forth the protest denial and HQ 229433, the headquarters ruling that accompanied the denial); Def.'s Mem. Ex. A (also setting forth HQ 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. HQ 229433 (May 10, 2002), available at 2002 WL 1584373 at *1-*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...
To continue reading
Request your trial
-
Leviton Mfg. Co. v. Pass & Seymour, Inc.
...to res judicata , which precludes its application if the second suit involves different or new facts. See E.I. du Pont de Nemours & Co. v. U.S., 561 F.Supp.2d 1320, 1330–32 (Ct. of Int'l Trade 2008). I do not see why patent misuse should be viewed differently than patent invalidity in this ......