H309938

U.S. Customs and Border Protection HQ H309938 April 30, 2020 CLA-2 OT:RR:CTF:EMAIN H309938 PF CATEGORY: Classification TARIFF NO.: 8543.70.99 Area Port Director Customs and Border Protection Electronics Center of Excellence and Expertise 605 W. 4th Ave., Ste. 230 Anchorage, AK 99501 Attn: Helene Mikes, Supervisory Import Specialist Re: Protest and Application for Further Review No: 3195-2018-100147; Classification of a Bitmain Antminer S9 Bitcoin Miner Dear Port Director: The following is our decision as to Protest and Application for Further Review No. 3195-2018-100147, which was filed on June 20, 2018 on behalf of Coinmint LLC (“Protestant”). The protest pertains to the classification of a Bitmain Antminer S9 Bitcoin Miner (“Antminer S9”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). The subject merchandise was entered by protestant on November 21, 2016. On December 22, 2017, CBP liquidated the entry under subheading 8543.70.99, HTSUS, which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other.” On June 20, 2018, protestant filed a protest and AFR regarding the tariff classification of the subject merchandise and claiming that the correct classification of the subject merchandise should be in subheading 8471.50.01, HTSUS, which provides for “Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included: Processing units other than those of subheading 8471.41 or 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units.” In the alternative, protestant maintains that the subject merchandise should be classified in subheading 8471.80.90, HTSUS, which provides for Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included: Other units of automatic data processing machines: Other: Other.” FACTS: The subject Antminer S9 is a machine used in mining various types of cryptocurrency. Cryptocurrency is defined as a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Individuals who possess cryptocurrency, such as Bitcoin, and seek to conduct a financial transaction rely on the network of “miners” to validate their transactions through mining. The act of “mining cryptocurrency” is the process of updating a ledger of cryptocurrency transactions known as the blockchain. The blockchain is a series of blocks and a block is a collection of cryptocurrency transactions. Mining is done by application specific integrated circuit (“ASIC”) miners, such as the subject Antminer S9, which compete against other cryptominers in an attempt to guess a specific number that is associated with a block containing transaction data. The first cryptominer to guess the correct number is rewarded by being able to authorize the transaction, update the blockchain, and receive a fraction of cryptocurrency. The Antminer S9 consists of an aluminum enclosure, two cooling fans, a controller printed circuit board assembly (“PCBA”), three separate PCBAs that are commonly referred to as hashboards, a single RJ45 Ethernet port, and 189 ASIC chips. The Antminer S9 requires at least one separate external power supply unit (“PSU”) that is attached to the hashboards and controller board, but may use up to three PSUs, one for each hashboard, depending on the capabilities of the PSUs employed. Once power is supplied to the Antminer S9, the unit is connected to a dynamic host configuration protocol (“DHCP”) network via the RJ45 Ethernet port, and the Antminer S9 will obtain an IP address automatically from a DHCP server. In order to verify the IP address, a user will download the Antminer S9’s software on an automatic data processing (“ADP”) machine, click on the IP Report button on the controller board, and view the IP address in a window on a computer screen. A user will subsequently open a browser, enter the IP address and a username and password, and configure the Antminer S9. Once configured, the Antminer S9 receives data from a mining pool and begins to randomly produce hash calculations until solved. The Antminer S9 is continuously communicating with the mining pool. Neither the power supply nor the ADP machine are imported with the Antminer S9. The controller boards contain the Ethernet RJ45 connection, a reset button, status LED indicator(s), and a memory card slot. The memory card is used to update the controller’s firmware or hardware recovery. Each hashboard is populated with numerous ASICs and heat sinks on both sides. The hashboards slide into the aluminum enclosure and are connected to the control board through a ribbon cable on the data connector. There is no “motherboard” or backplane slot that connects the hashboards to the controller, they merely rest vertically in a channel inside the enclosure. The Antminer S9 has minimal onboard flash memory and otherwise does not include a storage medium. There is no method for connecting a storage unit like a solid state drive or hard disk drive. A user cannot install, modify or remove program applications on the Antminer S9. The Antminer S9 also does not have a graphics interface, USB or similar control interface, a Bluetooth interface, audio input/output or a power supply. The Antminer S9 does not allow for general purpose computing tasks nor is it capable of displaying graphics. The Antminer S9 is programmed through firmware updates held on the memory card and configured and initialized through a network/Ethernet connected ADP machine. Mining functions are measured in “hash” calculations and are depicted as MH, GH, or TH. Pictures of the Antminer S9 are provided below: ISSUE: Whether the Antminer S9 is classified as a processing unit of heading 8471, HTSUS, as a unit of an ADP machine of heading 8471, HTSUS, or as an electrical machine and apparatus, having individual functions, not specified or included elsewhere in Chapter 85, of heading 8543, HTSUS. LAW AND ANALYSIS: Initially, we note that the matters protested are protestable under 19 U.S.C. §1514(a) (2) as decisions on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)). Further Review of Protests No. 3004-17-100339 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact, which have not been ruled upon by the Commissioner of Customs or his designee, or by the courts. Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. The 2016 HTSUS h

Initially, we note that the matters protested are protestable under 19 U.S.C. §1514(a) (2) as decisions on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)). Further Review of Protests No. 3004-17-100339 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact, which have not been ruled upon by the Commissioner of Customs or his designee, or by the courts.  Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. The 2016 HTSUS headings under consideration are as follows: 8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included….8471.50.01 Processing units other than those of subheading 8471.41 or 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units….8471