## Facts

- International Light Metals (ILM) imported duty-paid “titanium sponge,” a commercially pure form of titanium, between 1985 and 1987.
- ILM exported titanium products and sought manufacturing substitution drawback under 19 U.S.C. § 1313(b) to recover duties paid on the imported sponge.
- ILM used titanium-alloy scrap (with essentially the same titanium content as the sponge) as the manufacturing input for certain exported products.
- Customs initially approved the claims under an accelerated drawback program but, after an audit, denied claims where the exports were manufactured with titanium-alloy scrap rather than the imported sponge.
- ILM protested; Customs denied the protest. The Court of International Trade granted summary judgment to the United States, concluding the scrap was not of the “same kind and quality” as the imported sponge.

## Issues

1. Under 19 U.S.C. § 1313(b), whether substituted titanium-alloy scrap can be “of the same kind and quality” as imported titanium sponge for manufacturing substitution drawback.
2. Whether Customs and the Court of International Trade erroneously treated “same kind and quality” as requiring identity of the imported and substituted merchandise.

## Decision

- The Federal Circuit reversed the Court of International Trade’s summary judgment for the United States and remanded.
- The court held § 1313(b) does not require substituted merchandise to be identical to imported merchandise.
- The court concluded titanium-alloy scrap may satisfy “same kind and quality” relative to titanium sponge when the relevant shared characteristic is suitability for manufacturing the exported titanium products.

## Legal Principles

- In manufacturing substitution drawback under 19 U.S.C. § 1313(b), “same kind and quality” is not an identity standard and does not require the substituted good to be the same commercial product or physical form as the imported good.
- The statutory focus is whether the imported and substituted merchandise share the relevant characteristics that matter to the manufacturing of the exported article (functional interchangeability for that use).
- Agency or trial-court constructions that read an identity-of-merchandise requirement into “same kind and quality” are inconsistent with § 1313(b).

## Conclusion

The Federal Circuit held that § 1313(b) permits manufacturing substitution drawback without requiring identical inputs; because ILM’s substituted titanium-alloy scrap could be of the same kind and quality as imported titanium sponge based on relevant manufacturing characteristics, the denial of drawback on an identity theory was reversed and the case was remanded.


Int’l Light Metals v. United States, 194 F.3d 1355 (Fed. Cir. 1999)