Importer Tells CIT Surge Protectors Were Substantially Transformed in Philippines

Various models of uninterruptable power supplies and surge voltage protectors were substantially transformed by manufacturing operations in the Philippines and should be required to be marked as "Products of China," Cyber Power Systems said in an Aug. 1 motion at the Court of International Trade (Cyber Power Systems v. U.S., CIT #20-00124).

The merchandise at issue is five models of power supplies and a single type of surge protector entered in 2020. CBP detained the merchandise and demanded that Cyber Power re-mark the goods and their packages as “Made in China.” When Cyber Power refused, the goods were deemed excluded. Cyber Power said it then filed a protest to contest the exclusion, which CBP denied. Cyber Power has asked the court to enter judgment in the plaintiff’s favor and to direct CBP to allow the merchandise to be imported with their current “Made in Philippines” markings.

Cyber Power said that since October 2018, the devices have been manufactured at a plant in Manila and said the finished devices differ in name, character and operational use from the collection of parts brought to the assembly operations in Manila.

A change in name is indicative of a "substantial transformation" even though a name change "is typically viewed as the weakest indicator," Cyber Power said. A retail purchaser looking forthe subject devices "would expect to find the finished, functional retail article," Cyber Power argued. That purchaser would be surprised to find "an unassembled collection of parts" that exist before the Cyber Power Systems Manufacturing, Inc. (CPSMI) assembly operations are performed.

The devices also have a "distinct character" from the various component materials, Cyber Power said, and none of the components imported into the Philippines has the ability to perform any of these functions independently.

Cyber Power intends to call three witnesses at trial: the general manager and electrical project manager of Cyber Power Systems (USA) and the general manager of CPSMI to discuss the manufacturing process. Cyber Power said that it does not believe CBP will be able to introduce any evidence to counter the claim that the items were substantially transformed due to manufacturing processes in the Philippines. CBP has proposed introducing testimony of two CBP officials, of whom Cyber Power said possess "no actual knowledge of CPSMI’s manufacturing activities ... and they have not been qualified to provide expert testimony." Cyber Power moved to bar their testimonies, saying the government hopes to "improperly comment on the evidence [Cyber Power] will put forth at trial."