CIT Says Crypto Mining Chips Are ADP Machine Parts, Denies Section 301 Exclusions

Judge Lisa Wang said that Atlas' assemblies are properly classified under Harmonized Tariff Schedule subheading 8473.30.1180 as "parts and accessories of [automatic data processing] machines." However, the judge said the goods don't qualify for two Section 301 exclusions for graphics-related printed circuit assemblies, since Atlas' products were stripped of their graphics-related abilities. The judge also said the products don't qualify for the Section 301 exclusion for "unfinished logic boards," since Atlas' assemblies aren't "unfinished."

The product at issue is the Nvidia Crypto Mining Processor 170HX, which is a printed circuit board assembly that includes a graphics processing unit (GPU), "eight gigabytes of onboard memory" and other components. The imports are used for cryptocurrency mining, as the GPUs come with "numerous arithmetic logic units that can carry out the mathematical computations necessary for cryptocurrency mining in parallel."

The board must be connected to an automatic data processing (ADP) device or system with a CPU to function. Following importation, Atlas installed specially made software drivers, so the board could be used with a Linux-based operating system. Prior to entry, the board also was programmed with video basic input/output system firmware, which is designed to allow a motherboard with a CPU and operating system to "initialize the" board "in the operating system." In addition, Atlas was unsatisfied with the speed of the firmware and had the manufacturer provide an upgrade prior to importation.

The entries at issue automatically liquidated under subheading 8473.30.1180, which covers ADP machine parts and accessories, though at CIT, the U.S. sought to classify the goods under subheading 8543.90.68, which is a "residual provision for parts of electrical machines that are 'not specified or included elsewhere' in the chapter."

Ruling first on the customs issue in the case, Wang said that to fit under subheading 8473.30.1180, "(1) the merchandise constitutes a 'part' or an 'accessory'; (2) of an ADP machine; and (3) is 'solely or principally' used for such a machine."

Since neither the HTS nor its explanatory notes define "part" or "accessory," the judge turned to dictionary definitions and said "part" means "a constituent member of a machine or other apparatus" and "accessory" means "an object or device that is not essential in itself but adds to the beauty, convenience, or effectiveness of something else." Using these definitions, Wang held that the boards at issue "cannot perform computational tasks independently and must be connected to a machine with a CPU in order to function," and thus can be considered a "part" or "accessory" of ADP machines.

Regarding the second factor, the judge noted that Note 5(a) to Chapter 84 defines ADP machines as "digital machines" that are capable of, among other things, "being freely programmed in accordance with the requirements of the user."

While the government said the "pre-installed and custom-made" Linux operating system running on Atlas' servers didn't allow for "general computing tasks" and didn't let the user use the goods for anything other than mining cryptocurrency, Wang held that the government's "own expert witness contradicts this assertion." The witness said that a user, like Atlas, could remove the Linux operating system and install a new operating system. In addition, the judge noted that Atlas was able to receive an upgrade to its firmware from the manufacturer, establishing that Atlas' "servers are capable of accepting new applications that allow the user to manipulate the data as deemed necessary by the user."

Lastly, regarding the third factor, whether the boards are "solely or principally" used for ADP machines, the judge said the record shows that the boards "were designed for professional mining of cryptocurrency and must be incorporated onto an ADP machine in order to function." Thus, the goods fit under subheading 8473.30.1180, the judge said.

Wang then assessed whether the boards fit under any of the following three claimed Section 301 exclusions: U.S. Note 20(ttt)(iii)(108) for printed circuit assembles for "rendering images onto computer screens," (109) for assemblies to "enhance the graphics performance of [ADP] machines" and (110) for assemblies "constituting unfinished logic boards." All three exclusions say they cover goods under subheading 8473.30.1180.

The government argued that the imports don't qualify for the first two graphics-related exclusions, since the boards are "physically incapable of rendering images onto a computer screen" and "cannot generate, manipulate, construct" or otherwise be involved in the "graphics performance of another machine."

After establishing that the court should use the ordinary tools of interpreting the HTS when interpreting the exclusions, the judge held that for the graphics-related exclusions to apply, the assembly "must cause a picture, graphic, or photo to display on such screens" or "must enhance the performance of the creation and manipulation of picture images on an ADP machine." Wang agreed with the U.S. that the imported boards don't meet this requirement, since Atlas' expert witness clearly established that the imported GPU card was stripped of its graphics rendering features and created solely for crypto mining.

The court added that if it were to find that the "parenthetical reference to 'graphics processing modules'" in the (108) exclusion to cover all GPUs or that the "parenthetical reference to 'accelerator modules'" in the (109) exclusion to cover "all accelerator modules regardless of use, it would render redundant and meaningless the limiting phrases of: (1) 'for rendering images onto computer screens' in U.S. Note 20(ttt)(iii)(108); and (2) 'to enhance the graphics performance' of an ADP machine in U.S. Note 20(ttt)(iii)(109)."

The court also concluded that the imported boards don't qualify for the "unfinished logic boards" exclusion, since they're not "unfinished." Defining "unfinished" by its "common meaning of lacking the 'essential character' of the complete or finished article," Wang first said the "essential character" of a finished Crypto Mining Processing board has all the physical components of the product and is usable in crypto mining if used according to the manufacturer's instructions.

The judge held that at the time of importation, Atlas' boards had all the necessary hardware and firmware parts needed for "functionality with an ADP machine." While Atlas said its firmware wasn't to its "preferred specification" upon import, and thus wasn't functional, Wang said that the upgrades the company sought were to "improve mining performance" and not to "enable functionality."

(Atlas Power v. United States, Slip Op. 26-4, CIT # 23-00084, dated 01/27/26; Judge: Lisa Wang; Attorneys: J. Kevin Horgan of deKieffer & Horgan for plaintiff Atlas Power; Mathias Rabinovitch for defendant U.S. government)