Importer Can't Prove Philippine Origin for Power Supplies, Surge Protector, CIT Says

The Court of International Trade on Feb. 27 ruled in favor of an importer on the Philippine origin of one of its models of power supplies and surge protectors, but found the importer didn’t prove a substantial transformation occurred for five others and upheld CBP’s finding of Chinese origin for those models.

The decision followed a bench trial ordered by Judge Leo Gordon to sort out the manufacturing processes for the merchandiser (see 2202240059). Cyber Power Systems had produced the five models of power supplies and one model of surge protector at its factory in the Philippines, using components sourced from elsewhere, including China in the case of the printed circuit board assemblies for all six models.

For one model of power supply, CIT found that Cyber Power confirmed that the entirety of the manufacturing process occurred in the Philippines, relying on expert testimony from the general manager of Cyber Power Philippines that confirmed documentary evidence in the form of work orders, set lists and a manufacturing procedure flowchart.

The Philippine-origin model “began its manufacturing journey in the Philippines as a set of components not yet functional as a power source of any kind,” CIT said. “After several stages of manufacturing, each involving numerous steps directed toward changing the electronic properties of the device as a whole,” the universal power supply “left the Philippines as a fully functioning UPS.”

However, for four other models of universal power supply and one model of surge voltage protector (SVP), CIT found that the evidence offered by Cyber Power was not directly tied to the actual merchandise at issue in the case, and there remained “unanswered questions and unresolved conflicts among the documentary evidence,” the expert testimony and Cyber Power’s arguments, the trade court said.

“The court cannot reliably discern how the parts of the remaining four UPS devices, or the single SVP device at issue, were assembled into fully functioning products,” it said. Cyber Power “failed to present the specific testimony describing the assembly process of the subject devices for the relevant time period, and instead focused on a general overview of its product types and manufacturing operations,” CIT said.

And discrepancies between the expert testimony and other evidence “with respect to where and at what stage certain steps were performed, along with the absence of dates, quantities, and other merchandise-specific information, leave the court unable to determine whether the devices were substantially transformed in the Philippines,” the trade court said. “That the devices left the Philippines with new names cannot suffice to prove that ‘new and different article[s] emerged’ from the operations at Cyber Power Philippines factory,” it said. “… This is a case in which Plaintiff has failed in its burden of proof from the outset.”

(Cyber Power Systems (USA) v. U.S., Slip Op. 23-24, CIT # 20-00124, dated 02/27/23, Judge Leo M. Gordon; Attorneys: John Peterson of Neville Peterson for plaintiff Cyber Power Systems (USA); Luke Mathers for defendant U.S. government)