## Facts

- Cyber Power imported power-protection products (five uninterruptible power supply (UPS) models and one surge voltage protector (SVP) model) assembled in the Philippines from major components made in China.
- Key printed circuit board assemblies and other principal components were designed and fabricated in China, then shipped to a Philippine facility for further work.
- In the Philippines, Cyber Power performed assembly of multiple subassemblies, soldering and mounting, interconnection of components, firmware installation/programming, and testing and quality control.
- Customs previously determined China was the country of origin and directed that the goods be marked “Made in China,” after a disclosure involving “Made in Philippines” over-labeling on packaging also marked “Made in China.”
- Cyber Power continued using “Made in Philippines” marking, leading Customs to detain an entry, issue a notice to mark and/or redeliver, and deem the merchandise excluded when Cyber Power refused to remark.
- Cyber Power protested the deemed exclusion, asserting Philippine processing substantially transformed the Chinese components for marking purposes; Customs denied the protest, citing insufficient documentation and maintaining China as the origin.
- Cyber Power sued in the Court of International Trade under 28 U.S.C. § 1581(a); both parties moved for summary judgment.

## Issues

1. Whether Philippine assembly, programming, and testing of Chinese-origin components substantially transformed the merchandise so the finished UPS and SVP products were products of the Philippines for country-of-origin marking under 19 U.S.C. § 1304(a).
2. Whether either party was entitled to summary judgment on the substantial-transformation question given disputes about the nature and significance of the Philippine operations.

## Decision

- The court denied Cyber Power’s motion for summary judgment.
- The court denied the Government’s motion for summary judgment in relevant part.
- The court held that genuine disputes of material fact prevented a legal determination, on summary judgment, of whether the goods were of Chinese or Philippine origin.
- The case was set for trial to resolve model-specific factual questions bearing on substantial transformation.

## Legal Principles

- Country-of-origin marking turns on whether processing results in an article with a new name, character, or use different from the article(s) prior to processing (substantial transformation doctrine).
- In a protest action under 28 U.S.C. § 1581(a), the court reviews Customs’ decision de novo, but 28 U.S.C. § 2639(a)(1) places on the plaintiff the burden to prove contested factual issues showing Customs’ determination is incorrect.
- Substantial transformation analysis is fact-dependent and may require detailed, product- and process-specific evidence about component functionality, degree of assembly, and the effect of programming and testing on the finished article’s identity and function.
- Summary judgment is improper where competing evidence creates material disputes about whether imported components were already dedicated to their ultimate use and whether downstream processing meaningfully changed the article’s character.

## Conclusion

The Court of International Trade concluded that the record did not permit, as a matter of law, a determination of whether Cyber Power’s Philippine operations substantially transformed Chinese components for origin marking, and it therefore denied the parties’ cross-motions for summary judgment and proceeded toward trial.


Cyber Power Sys. (USA) Inc. v. United States, 560 F. Supp. 3d 1347 (Ct. Int'l Trade 2022)