H310388

U.S. Customs and Border Protection HQ H310388 July 28, 2020 CLA-2 OT:RR:CTF:EMAIN H310388 PF CATEGORY: Classification TARIFF NO.: 8543.70.99 Port Director U.S. Customs and Border Protection Protest & Control 1100 Raymond Boulevard Newark, NJ 07102 Attn: Tommaso Fiermonte, Import Specialist Re: Protest and Application for Further Review No: 3029-18-100036; Classification of Cryptocurrency Miners Dear Port Director: This is in response to the above-referenced protest and application for further review (“AFR”). The protesting party is Lexon Insurance Company (“Protestant”), surety for importer of record, Giga Watt, Inc. The Protest and corresponding AFR pertain to a decision by U.S. Customs and Border Protection (“CBP”) as to the proper classification of a Pandaminer B3 Plus imported with a Manli GTX 1060 NVIDIA video card (“Miners”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). Our response follows. FACTS: The merchandise subject to this protest was entered between June 26, 2017 through September 11, 2017. On March 2, 2018, CBP liquidated the entries 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 November 28, 2018, protestant filed the protest and AFR regarding the tariff classification of the subject merchandise and claimed that the correct classification of the subject merchandise should be in subheading 8471, 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.” In the alternative, protestant maintains that the subject merchandise should be classified in heading 8473, HTSUS, which provides for “Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8470 to 8472.” The Miners are graphics-processing unit (“GPU”) type cryptocurrency mining machines. The Miners are specialized and perform the core function of generating hash algorithms to execute blockchain validations or mining 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, Litecoin and Ethereum, and seek to conduct a financial transaction rely on the network of “miners” to validate their transactions through mining. Mining functions are measured in “hash” calculations and are depicted as MH, GH, or TH. 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, with each block constituting a collection of cryptocurrency transactions. Mining is done by GPU miners and application specific integrated circuit miners, 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 Miners employ printed circuit board assembly (“PCBA”) graphics processors that are typically used in personal computers that are identified as GPUs. The Pandaminer itself consists of an enclosure, a control board, and cooling fans. The Pandaminer also has various connections such as Ethernet, HDMI and USB ports. In addition, the Pandaminer uses eight commercially available GPU PCBAs, which is this case are the Manli GTX 1060 NVIDIA video cards, to perform the hash calculations and is shipped with its own power supply adapter/cable. The Pandaminer is dedicated to performing the function of cryptocurrency mining. With respect to the functionality of the Pandaminer, the Protestant states: What is a GPU Integrated Miner? A GPU integrated miner is a professional altcoin mining device which supports multiple hashing algorithms like ETH and other cryptocurrencies. It is assembled by high configuration graphics cards, customized and highly compatible case, professional rack and other optimized accessories for the highest mining efficiency. With its perfect flexibility, a GPU integrated miner can be applied in multi-hashing algorithm mining, which provides a lot more options to mine cryptocurrencies which have seen surging fever and growing profits. The Miners require at least one separate external power supply unit. Once power is supplied to the Miners, the units are connected to the internet via an Ethernet cable and port. A user will download the Miners’ software on an automatic data processing machine (“ADP”) and will type in their wallet address onto the ADP machine, save the file, and configure the Miners. The Miners have minimal onboard flash memory and otherwise do 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 Miners. The Miners do not allow for general purpose computing tasks nor are they capable of displaying graphics. The Miners are configured and initialized through a network/Ethernet connected ADP machine. ISSUE: Whether the Miners are classified as ADP machines of heading 8471, HTSUS, as parts of an ADP machine of heading 8473, HTSUS, or as electrical machines and apparatus, having individual functions, not specified or included elsewhere, of heading 8543, HTSUS. LAW AND ANALYSIS: We note initially that the instant protest was timely filed, within 180 days from the mailing of notice of demand for payments against its bond. See 19 U.S.C. § 1514(c)(3). Notice of demand for payment against Protestant’s bond was made on June 1, 2018, and this protest was filed on November 28, 2018, within 180 days. In addition, further review of Protest No: 3029-18-100036 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 2017 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 8473 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8470 to 8472 8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof Additional U.S. Rules of Interpretation 1 (AUSR1), HTSUS, provides, in part: In the absence of special language or context

We note initially that the instant protest was timely filed, within 180 days from the mailing of notice of demand for payments against its bond. See 19 U.S.C. § 1514(c)(3). Notice of demand for payment against Protestant’s bond was made on June 1, 2018, and this protest was filed on November 28, 2018, within 180 days. In addition, further review of Protest No: 3029-18-100036 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 2017 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 included8473 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8470 to 84728543 Electrical machines and apparatus, having individual functions, not specified or included