Merck & Co., Inc. v. United States

United States Court of Appeals for the Federal Circuit

2006-1538

MERCK & CO., INC.,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

John J. Galvin, Galvin & Mlawski, of New York, New York, argued for plaintiff-
appellant. Of counsel was Jack D. Mlawski.

Edward F. Kenny, Trial Attorney, International Trade Field Office, Commercial
Litigation Branch, Civil Division, United States Department of Justice, of New York, New
York, argued for defendant-appellee. With him on the brief were Peter D. Keisler,
Assistant Attorney General, Jeanne E. Davidson, Director, and Barbara S. Williams,
Attorney in Charge. Of counsel on the brief was Chi S. Choy, Office of Assistant Chief
Counsel, International Trade Litigation, United States Customs and Border Protection, of
New York, New York.

Appealed from: United States Court of International Trade

Judge Judith M. Barzilay
 United States Court of Appeals for the Federal Circuit

2006-1538

MERCK & CO., INC.,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

____________________

DECIDED: September 19, 2007
____________________

Before MAYER, Circuit Judge, PLAGER, Senior Circuit Judge, and LOURIE, Circuit
Judge.

LOURIE, Circuit Judge.

Merck & Co., Inc. (“Merck”) appeals from the decision of the United States Court

of International Trade sustaining the denial by the United States Customs and Border

Protection (“Customs”) of Merck’s claim for drawback under 19 U.S.C. § 1313(j)(2) on

Merck’s export of substitute, fungible goods to Canada and Mexico. Merck & Co., Inc.

v. United States, 435 F. Supp. 2d 1253 (Ct. Int’l Trade 2006). Because the trial court

correctly ruled that Merck is not entitled to the drawback, we affirm.
 BACKGROUND

This appeal involves a claim for a drawback. A drawback is defined as “the

refund or remission, in whole or in part, of a customs duty, fee or internal revenue tax

which was imposed on imported merchandise under Federal law because of its

importation.” 19 C.F.R. § 191.2(i). Section 1313(j)(1) of Title 19 provides for a

drawback when imported duty-paid merchandise is subsequently exported. Section

1313(j)(2) provides for a drawback when substituted merchandise that is commercially

interchangeable with the imported duty-free merchandise is subsequently exported.

Section 1313(j)(4)(A), added pursuant to the North American Free Trade (“NAFTA”)

Implementation Act, mostly eliminates drawback for the type of merchandise listed in

§ 1313(j)(2)—exported merchandise that is fungible with and substituted for the duty-

paid imported merchandise—when that merchandise is exported to a NAFTA country.

However, certain types of merchandise set forth in § 3333(a)(1-8) are not subject to the

§ 1313(j)(4)(A) NAFTA drawback restriction. Those exceptions will be discussed infra.

The relevant provisions of 19 U.S.C. § 1313(j) are as follows, with emphases

provided:

19 U.S.C. § 1313. Drawback and refunds

***

(j) Unused merchandise drawback

***

(2) Subject to paragraph (4), if there is, with respect to imported
merchandise on which was paid any duty, tax, or fee imposed under
Federal law upon entry of importation, any other merchandise (whether
imported or domestic), that—

(a) is commercially interchangeable with such imported

2006-1538 2
 merchandise;

***

then, notwithstanding any other provision of law, upon the exportation or
destruction of such other merchandise the amount of each such duty, tax,
and fee paid regarding the imported merchandise shall be refunded as
drawback under this subsection, . . . .

***

(4)(A) Effective upon the entry into force of the North American Free
Trade Agreement, the exportation to a NAFTA country, as defined in
section 2(4) of the North American Free Trade Agreement Implementation
Act [19 U.S.C. § 3301(4)], of merchandise that is fungible with and
substituted for imported merchandise, other than merchandise described
in paragraphs (1) through (8) of section 203(a) of that Act [19 U.S.C. §
3333(a)], shall not constitute an exportation for purposes of paragraph (2).

By its terms, § 1312(j)(4)(A) generally eliminates drawback for merchandise

substituted for the duty-paid imported merchandise and subsequently exported to a

NAFTA country. As provided for in § 1313(j)(4)(A), there are eight types of

merchandise listed in § 3333(a)(1-8), however, that are not subject to the NAFTA

drawback restriction and that therefore qualify as merchandise under § 1313(j)(2) for

which drawback can be obtained. In other words, drawback provided for under

§ 1313(j)(2) is negated for NAFTA countries under § 1313(j)(4)(A) but is rejuvenated by

the “other than” clause reciting eight exceptions. The exception relevant to this appeal

is § 3333(a)(2), which reads as follows, with the relevant portion emphasized: 1

1
The other exceptions set forth in § 3333(a) include: (1) a good entered
under bond for transportation and exportation to a NAFTA country; (3) a good that is
deemed to be exported from the United States, or used as a material in the production
of another good that is deemed to be exported to a NAFTA country, or substituted for by
a good of the same kind and quality that is used as a material in the production of
another good that is deemed to be exported to a NAFTA country, and that is delivered
to a duty-free shop, for ship’s stores or supplies for ships or aircraft, or for use in a
project undertaken jointly by the United States and a NAFTA country and destined to

2006-1538 3
 19 U.S.C. § 3333. Drawback

(a) “Good subject to NAFTA drawback” defined

For purposes of this Act and the amendments made by subsection (b) of
this section, the term “good subject to NAFTA drawback” means any
imported good other than the following:

***

(2) A good exported to a NAFTA country in the same condition as
when imported into the United States.

On May 25, 1993, Merck imported 35 kilograms of famotidine 2 (“the duty-paid

imported merchandise”) to the United States from its manufacturer in Ireland, at a duty

rate of 6.9% ad valorem. During July and August 1995, Merck imported an additional

1195 kilograms of famotidine, which, pursuant to the Uruguay Round Trade Agreement,

was duty-free. 3 On July 13 and August 4, 1995, Merck exported 35 kilograms (“the

exported merchandise”) of duty-free imported famotidine to Mexico and Canada.

become the property of the United States; (4) a good exported to a NAFTA country for
which a refund of customs duties is granted by reason of the failure of the good to
conform to sample or specification, or the shipment of the good without the consent of
the consignee; (5) a good that qualifies under the rules of origin set out in section 3332
of this title; (6) a good provided for in the subheading 1701.11.02 of the HTS; (7) a
citrus product that is exported to Canada; (8) a good used as a material, or substituted
for by a good of the same kind and quality that is used as a material, in the production
of apparel, or a good provided for in subheading 6307.90.99 (insofar as it relates to
furniture moving pads), 5811.00.20, or 5811.00.30 of the HTS, that is exported to
Canada and that is subject to Canada’s most-favored-nation rate of duty upon
importation into Canada.
2
Famotidine chemical is formulated into famotidine tablets and is marketed
under the trademark PEPCID.
3
Under the Uruguay Round Trade Agreement, tariffs on pharmaceutical
products were eliminated, effective January 1, 1995.

2006-1538 4
Although the exported 35 kilograms was not the same material that was imported on

May 25, 1993, Merck then filed a claim for drawback seeking a refund of the duties paid

for the 35 kilograms of famotidine imported in 1993. Merck alleged that the exported

merchandise was fungible with and substituted for the duty-paid imported merchandise

and thus that it was entitled to a drawback under § 1313(j)(2), which permits drawback

for such merchandise. Customs denied Merck’s drawback claim, reasoning that

§ 1313(j)(4)(A) generally prohibits drawback for merchandise fungible with and

substituted for the duty-paid imported merchandise when that merchandise is exported

to a NAFTA country, unless the merchandise is of the type listed in § 3333(a). Because

Merck’s merchandise was exported to Mexico and Canada, and the duty-paid imported

merchandise did not meet any of the exceptions in § 3333(a), Customs determined that

Merck was not entitled to a drawback.

Merck then filed suit in the Court of International Trade seeking reversal of

Customs’ decision. Both parties filed motions for summary judgment. Merck asserted

that its exported merchandise was not subject to the NAFTA drawback restriction in

§ 1313(j)(4)(A) because it met one of the exceptions in § 3333(a), viz., a “good exported

to a NAFTA country in the same condition as when imported.” The government argued

that the duty-paid imported merchandise was the basis for the drawback claim, and,

under the plain language of § 1313(j)(4)(A), the § 3333(a) exceptions apply to the duty-

paid imported merchandise, not to the substituted exported merchandise. Because the

imported duty-paid merchandise was not itself subsequently exported, the government

argued that it was not a “good exported to a NAFTA country in the same condition as

when imported” under § 3333(a)(2) and therefore was subject to the NAFTA drawback

2006-1538 5
restriction in § 1313(j)(4)(A). The court agreed with the government and granted its

motion for summary judgment.

The trial court first noted that the statutory scheme is “inartfully drafted” because

“portions of it lie within the laws governing NAFTA, while other parts are embedded

within the statutes on duty drawback.” Merck, 435 F. Supp. 2d at 1258. The court then

noted that the parties disagreed over the interpretation of the clause in § 1313(j)(4)(A)

that provides that the “exportation to a NAFTA country . . . of merchandise that is

fungible with and substituted for imported merchandise, other than merchandise

described in [][19 U.S.C. § 3333(a)], shall not constitute an exportation” subject to duty

drawback. (emphasis added). Merck argued to the court that the “other than

merchandise” clause refers to the substituted exported merchandise. The government,

on the other hand, argued that the “other than merchandise described in 19 U.S.C.

§ 3333(a)” clause refers to the duty-paid imported merchandise.

The trial court determined that, applying the last antecedent rule, 4 the term

“imported merchandise” that immediately precedes the “other than merchandise” clause

modifies that clause. The court therefore adopted the government’s interpretation that

the “other than merchandise” refers to the duty-paid imported merchandise and that

§ 1313(j)(4)(A) eliminates drawback for substitute goods exported to a NAFTA country

unless the duty-paid imported merchandise is of the type listed in § 3333(a). The court

observed, however, that both interpretations lead to “ambiguous, absurd results and

renders impotent portions of the statutory scheme.” Merck, 435 F. Supp. 2d at 1259.

4
The court, quoting Barnhart v. Thomas, 540 U.S. 20, 26 (2003), stated
that the last antecedent rule instructs that “a limiting clause or phrase . . . should
ordinarily be read as modifying only the noun or phrase that it immediately follows.”

2006-1538 6
Hence, the court examined the legislative history and administrative regulations

pertaining to § 1313(j)(4)(A).

According to the trial court, the legislative history of the NAFTA Implementation

Act makes clear that Congress sought to eliminate nearly all drawbacks for substitute

unused merchandise exported to Mexico and Canada. The court observed that under

Merck’s interpretation of the relevant statutory provision, nearly all substituted

merchandise exported to Mexico or Canada would be eligible for duty drawback. The

court therefore determined that Merck’s interpretation of the statute could not be correct.

Moreover, the court observed that Customs’ regulations and Headquarters Rulings were

consistent with the statutory construction that it proposed. The court therefore afforded

that interpretation deference. The court concluded that the government’s interpretation

of § 1313(j)(4)(A) was valid, granted its motion for summary judgment, and denied

Merck’s motion for summary judgment.

Merck timely appealed, and we have jurisdiction pursuant to 28 U.S.C.

§ 1295(a)(5).

DISCUSSION

This court reviews a grant of summary judgment by the Court of International

Trade de novo. Int’l Light Metals v. United States, 194 F.3d 1355, 1361 (Fed. Cir.

1999). In reviewing a denial of a motion for summary judgment, “we give considerable

deference to the trial court, and will not disturb the trial court’s denial of summary

judgment unless we find that the court has indeed abused its discretion.” Elekta

Instrument S.A. v. O.U.R. Scientific Int’l, Inc., 214 F.3d 1302, 1306 (Fed. Cir. 2000).

On appeal, Merck argues, as it did to the trial court, that its exported famotidine,

2006-1538 7
which is fungible with and was substituted for the duty-paid imported famotidine, is not

subject to the NAFTA drawback restriction under § 1313(j)(4)(A) because it is of the

type listed in exception § 3333(a)(2), viz., a good “exported to a NAFTA country in the

same condition as imported.” According to Merck, under the plain language of

§ 1313(j)(4)(A), the exceptions in § 3333(a) apply to the substituted exported

merchandise, not to the duty-paid imported merchandise. Merck argues that its

interpretation is supported by § 1313(j)(4)(B), which was added to the statute in 2003

and expressly precludes drawback for a good exported to Chile in the same condition

as when imported into the United States. Because no similar express preclusion is

present in § 1313(j)(4)(A), Merck argues that Congress intended to permit drawback for

such merchandise exported to a NAFTA country. Merck finally argues that the court

erred in affording Customs’ regulations and Headquarters Rulings deference because

the regulations do not address whether the exceptions in § 3333(a) apply to the duty-

paid imported or the substitute exported merchandise.

The government responds that the trial court correctly interpreted § 1313(j)(4)(A)

as providing that, unless the imported merchandise is of the type listed in § 3333(a), no

drawback is permitted for substituted merchandise exported to a NAFTA country.

According to the government, the duty-paid imported merchandise was never exported

and thus was not “exported in the same condition as when imported” under

§ 3333(a)(2). Because the duty-paid imported merchandise did not meet any of the

exceptions in § 3333(a), the government asserts that § 1313(j)(4)(A) prohibits a

drawback. The government further responds that the statement in § 1313(j)(4)(B),

which expressly prohibits drawback for substitute goods exported to Chile in the same

2006-1538 8
condition as imported, should not be read to permit drawback for such merchandise

exported to a NAFTA country under § 1313(j)(4)(A). The government argues that

§ 1313(j)(4)(B) in fact reflects Customs’ interpretation of drawback under § 1313(j)(4)(A)

and clarifies the statute. The government finally responds that Congress clearly

intended to eliminate “same condition” substitute unused merchandise drawback

between NAFTA countries. It argues that the legislative history and Customs’

regulations are consistent with the court’s interpretation of § 1313(j)(4)(A).

We agree with the government that the trial court correctly sustained the denial of

Merck’s claim for drawback under § 1313(j)(2) in light of § 1313(j)(4)(A). In accordance

with sound legal principles, we first consider the statutory language to determine

whether it resolves the issue whether Merck’s substituted unused merchandise

exported to Mexico and Canada is entitled to drawback. The relevant statutory

provision, § 1313(j)(4)(A), provides that “the exportation to a NAFTA country . . . of

merchandise that is fungible with and substituted for imported merchandise, other than

merchandise described in [19 U.S.C. § 3333(a)(1-8)], shall not constitute an exportation

for purposes of paragraph (2).” (emphasis added). Under the language of the statute,

there is no drawback for merchandise substituted for the imported merchandise and

subsequently exported to a NAFTA country, unless the merchandise is of the type listed

in § 3333(a). While Merck contends that the “other than merchandise described in” §

3333(a) refers to the exported merchandise, the government argues that that clause

refers to the duty-paid imported merchandise.

We conclude that the statutory language is, as the trial court stated, “inartfully

drafted” and hopelessly ambiguous. The Court of International Trade applied the last

2006-1538 9
antecedent rule and determined that the “other than merchandise” clause refers to the

imported merchandise. However, we do not agree that the last antecedent rule

resolves the issue. Although the term “imported merchandise” does immediately

precede the “other than merchandise” clause, the last antecedent rule cannot be

applied to render language inconsistent with that with which it is surrounded. The entire

context of the clause indicates that it is “exportation of merchandise” that the “other than

merchandise” refers to. The clause states that the “exportation . . . of merchandise that

is fungible with and substituted for imported merchandise . . . shall not constitute an

exportation.” It is exportation that is being addressed. The term “imported

merchandise” merely explains what the exported merchandise is substituted for, but the

imported merchandise is not the subject of the clause. Thus, the last antecedent rule

does not apply here. Barnhart, 540 U.S. at 26 (noting that the last antecedent rule is

not an absolute rule).

Whatever the interpretation of that “other than” clause, consideration of the other

statutory language, however, creates serious ambiguity regarding Congress’s intent.

For example, § 1313(j)(2) permits drawback for the exportation of substituted goods but

provides that it is “subject to paragraph (4).” However, the end of that provision

provides that “notwithstanding any other provision of law,” drawback is permitted. Thus,

while one section of the provision suggests that drawback for substituted merchandise

is permitted only subject to paragraph (4), another section suggests that drawback is

permitted, irrespective of any other statutory provision. Moreover, § 1313(j)(4)(A)

restricts drawback for goods exported to a NAFTA unless the merchandise is of the type

described in § 3333(a)(1-8). However, § 3333(a) is entitled “Good subject to NAFTA

2006-1538 10
drawback” and provides that the term “good subject to NAFTA drawback” means “any

imported good other than the following” eight types of merchandise. Thus, § 3333(a)

suggests that a good entitled to drawback does not include any of the eight types of

listed merchandise, while § 1313(j)(4)(A) provides that any of the goods listed in the

eight exceptions are entitled to drawback.

The statutory scheme thus contains one “subject to” clause, one “notwithstanding

any other provision” clause, two “other than” clauses, a “shall be refunded” clause, and

a “shall not constitute” clause. It is a confusing and inconsistent maze of twists and

turns.

However, consideration of a number of various sources including the legislative

history, the regulations, and the Headquarters Rulings enables us to ascertain

Congress’s intent and to affirm the trial court. We first consider the legislative history.

See Alaskan Arctic Gas Pipeline Co. v. United States, 831 F.2d 1043, 1046 (Fed. Cir.

1987) (“[I]f the bare language of the statute fails to provide adequate guidance or if a

literal interpretation of the statute would lead to an incongruous result, the court must

resort to the purpose and legislative history of the statute to determine the intent of

Congress in enacting the statute.”). The legislative history makes clear that Congress

enacted § 1313(j)(4)(A) in order to eliminate nearly all drawback for substitute goods

exported to a NAFTA country. For example, the Statement of Administrative Action,

accompanying the NAFTA Implementation Act, explains the purpose of each portion of

the NAFTA, including the following section involving drawback for unused and

substituted merchandise: “Article 303 eliminates, as of the dates of the entry into force

of the Agreement, same condition substitution drawback on exports of goods to another

2006-1538 11
NAFTA country.” House Doc., 103-159, Vol. 1, 103d Cong., 1st Session, pp. 1, 20

(emphasis added). Moreover, statements made in the Senate Proceedings further

suggest that the purpose in enacting § 1313(j)(4)(A) was to eliminate “same condition”

substitution unused merchandise drawback:

Section 203(c) amends section 313(j) of the Tariff Act of 1930 to provide
that, effective immediately, drawback may not be paid on exports to a
NAFTA country of merchandise that is fungible with and substituted for
imported merchandise. This subsection implements paragraph 2(d) of
Article 303, which eliminates “same condition substitution” drawback on
trade among the NAFTA parties.

139 Cong. Rec., S16092-01, Congressional Record—Senate, Proceedings and

Debates of the 103rd Congress, First Session, November 18, 1993. Additionally, House

Report No. 103-361, Nov. 15, 1993, 1993 USCCAN 2552, 2556, 2588, discusses the

NAFTA, and states that:

Subsection(c) eliminates, effective upon entry into force of the Agreement,
same condition substitution drawback by amending section 313(j)(2) of the
Tariff Act of 1930 (19 U.S.C. 1313(j)(2)) thereby eliminating the right to a
refund on the duties paid on a dutiable good upon shipment to Canada or
Mexico of a substitute good, except for the goods describe in paragraphs
one through eight of section 203(a).

Finally, the NAFTA itself makes clear that drawback on substituted merchandise was to

be eliminated; it reads in pertinent part as follows:

Article 303: Restriction on Drawback and Duty Deferral Programs.

***

2. No Party may, on condition of export, refund, waive or reduce:

***
(d) customs duties paid or owed on a good imported into its
territory and substituted by an identical or similar good that is
subsequently exported to the territory of another Party.

Thus, the legislative history of § 1313(j)(4)(A) makes clear that Congress intended to

2006-1538 12
eliminate drawback for merchandise substituted for the duty-paid imported merchandise

and subsequently exported to a NAFTA country in the same condition as imported.

Merck is attempting to obtain drawback on its exported famotidine as a substitute for the

imported duty-paid famotidine, which is precisely the type of situation where Congress

clearly intended to preclude drawback. Permitting drawback for Merck’s exported

merchandise, even though fungible with the duty-paid imported merchandise, would

thus be contrary to the clear intent of Congress. Hence, Merck’s interpretation of the

statute cannot be correct.

Customs’ regulations and Headquarters Rulings are consistent with the trial

court’s conclusion. For example, 19 C.F.R. § 181.41 provides as follows:

Subpart E. Restrictions on Drawback and Duty-Deferral Programs.

This subpart sets forth the provisions regarding drawback claims and duty-
deferral programs under Article 303 of the NAFTA and applies to any good
that is a “good subject to NAFTA drawback” within the meaning of 19
U.S.C. 3333.

19 C.F.R § 181.42 further provides:

The following duties or fees which may be applicable to a good entered for
consumption in the Customs territory of the United States are not subject
to drawback under this subpart:

***

(d) Customs duties paid or owed under unused merchandise
substitution drawback. There shall be no payment of such
drawback under 19 U.S.C. 1313(j)(2) on goods exported to Canada
or Mexico on or after January 1, 1994.

Section 181.42 thus prohibits “unused merchandise substitution” drawback on goods

exported to Canada or Mexico on or after January 1, 1994. That regulation is consistent

with the legislative history, which indicates that Congress intended to eliminate

2006-1538 13
drawback for merchandise that is substituted for the duty-paid imported merchandise

and exported to a NAFTA country.

Customs’ Headquarters Rulings are also consistent with the regulations. For

example, one such ruling considered the same issue and stated that “[w]e do not agree

that the limitation in [§1313] (j)(4) applies to the substituted merchandise which is not

the basis of the drawback claim, but find that the limitation applies to the imported good

which is the basis of the drawback claim.” HQ 228209. Customs found support for its

position in the legislative history. Customs noted that it had taken a similar position in

its prior decisions, citing HQ 227272, 227876, 226541. The ruling concludes by stating

“[u]nder the facts described, the law does not provide for drawback under 19 U.S.C.

§ 1313(j)(2), on exports of substituted goods to Canada, unless the imported goods on

which the drawback claim is based are described in paragraphs (1) through (8) of 19

U.S.C. § 3333(a).” These regulations and Headquarters Rulings reflect an

interpretation of § 1313(j)(4)(A) that is consistent with the legislative history and is

entitled to deference.

Merck argues that changes made to the drawback law in order to implement

drawback restrictions under the US-Chile Free Trade Agreement support its position

that substitution unused merchandise drawback is permitted under § 1313(j)(4)(A). The

US-Chile Free Trade Implementation Act amended 19 U.S.C. § 1313(j)(4) by adding

paragraph (B), which reads as follows:

(B) Beginning on January 1, 2015, the exportation to Chile of
merchandise that is fungible with and substituted for imported
merchandise, other than merchandise described in paragraphs (1) through
(5) of section 203(a) of the United States-Chile Free Trade Agreement
Implementation Act, shall not constitute an exportation for purposes of
paragraph (2) [19 U.S.C. § 1313(j)(2)]. The preceding sentence shall not

2006-1538 14
 be construed to permit the substitution of unused drawback under
paragraph (2) of this subsection with respect to merchandise described in
paragraph (2) of section 203(a) of the United States-Chile Free Trade
Agreement Implementation Act.

According to Merck, the sentence at the end of the above provision explicitly prohibits

drawback of substituted merchandise described in paragraph 2 of section 203, i.e., a

good exported to Chile in the same condition as when imported into the United States.

Merck argues that because the added sentence in subsection (B) was not added to

subsection (A), Congress intended the new subsection to be interpreted differently from

§ 1313(j)(4)(A). Specifically, Merck argues that subsection (B) expressly prohibits

“same condition unused substitute merchandise” drawback, whereas subsection (A), by

not expressly prohibiting it, permits it. We disagree.

First, Merck again argues for an interpretation that directly conflicts with

Congress’s stated purpose of eliminating drawback for substituted merchandise

exported to Mexico or Canada. Second, amending a statute by adding a new

subsection without changing the remaining sections of the same statute can be

considered a clarification, completely in conformity with the prior interpretation of the

unamended sections. Thus, the addition of subsection (B) to § 1313(j)(4), without

changing subsection (A), does not mean that the two subsections must be treated

differently. We agree with the government that it is more reasonable to assume that the

United States Trade Representative, when negotiating the US-Chile Free Trade

Agreement, and Congress, when enacting its Implementation Act, adopted Customs’

existing interpretation of what constitutes an exportation pursuant to § 1313(j)(4)(A)

when it implemented new subsection (B).

In sum, we conclude that the legislative history, the regulations and the

2006-1538 15
Headquarters Rulings make clear that Congress intended to eliminate drawback for

merchandise substituted for duty-paid imported merchandise and exported to a NAFTA

country. We agree with the Court of International Trade that the government’s

interpretation of § 1313(j)(4)(A), as supported by the legislative history and Customs’

regulations and Headquarters Rulings, is the correct one. Thus, the court did not err in

granting the government’s motion for summary judgment, nor abuse its discretion in

denying Merck’s motion for summary judgment.

CONCLUSION

For the foregoing reasons, Merck is not entitled to drawback under § 1313(j)(2),

on exports of the substituted famotidine to Mexico and Canada.

AFFIRMED

2006-1538 16