DEPOSITED BY THE

UNITED STATES OF AMERICA

classes of articles, to which the 6-month period prescribed in section 106 (e) (3) (B) (ii) of the act is applicable, unless the contractor consents and agrees that such 6-month period shall apply with respect to all of the articles, or all of the articles and services, for which exemption is claimed in such application. In the absence of such consent and agreement, the contractor shall be required to file a separate application for exemption of those items to which the 3-month period applies, and a separate application for exemption of those items to which the 6-month period applies.

(c) Effect.—(1) When the contractor does not waive the exemption with respect to amounts received or accrued in a fiscal year from the sale of a standard commercial article, such receipts or accruals are exempt and may not be included as renegotiable sales in the financial statement filed by the contractor for such fiscal year.

(2) When the contractor files an application for exemption of amounts received or accrued in a fiscal year from the sale of a like article, or a standard commercial service, or a like service, such receipts or accruals are exempt for such fiscal year if within 3 months thereafter, or any longer agreed period, the Board grants, or fails to deny, such application.

(3) When the contractor files an application for exemption of amounts received or accrued in a fiscal year from sales of an article in a standard commercial class of articles, such receipts or accruals are exempt if within 6 months thereafter, or any longer agreed period, the Board grants, or fails to deny, such application.

(d) Procedure.-When a contractor files an application, pursuant to section 106(e)(3) of the act, for exemption of some of its receipts or accruals for a fiscal year, the applicability of the exemption to such receipts or accruals will be determined by the Board before the Board takes action with respect to any other receipts or accruals of the contractor in such fiscal year.

(e) Initial treatment.—(1) If the amounts received or accrued under prime contracts with the Department and subcontracts during the fiscal year by the contractor and all related con

tractors, including receipts or accruals for which exemption may be obtained only by application to the Board under section 106 (e) (3) of the act, aggregate less than the minimum amount for renegotiation prescribed in section 105 (f) (1) of the act, the contractor shall not file the Application for Commercial Exemption set forth in § 1467.31. An Application for Commercial Exemption filed under such circumstances will be returned to the contractor without action by the Board thereon.

(2) Except as stated in subparagraph (1) of this paragraph, every contractor who claims that the exemption provided in paragraph (1) (B) or (C) or paragraph (2) of section 106 (e) of the act is applicable to any of its receipts or accruals for a fiscal year shall file the Application for Commercial Exemption as provided in § 1467.31.

(3) If, in addition to receipts or accruals for which the contractor has filed an Application for Commercial Exemption, the contractor in the same fiscal year has other renegotiable receipts or accruals, the contractor shall not be entitled to file a Standard Form of Contractor's Report or a Statement of Non-Applicability for such fiscal year (see § 1470.3 (a) and (b) of this subchapter) until the Board has completed its action upon the Application for Commercial Exemption. A Standard Form of Contractor's Report or a Statement of Non-Applicability filed before such time will be returned to the contractor, and will not constitute the filing of a financial statement under section 105 (e) (1) of the act and will not commence the running of the 1-year period of limitations prescribed in section 105 (c) of the Act.

1467.23 Waiver of exemption.-(a) Scope. Under section 106 (e) of the act, the contractor may waive the exemption therein granted by including a statement to such effect in the Standard Form of Contractor's Report filed by the contractor pursuant to section 105(e)(1). If the Board agrees to accept a waiver of the exemption from a contractor who has not included such waiver in its Standard Form of Contractor's Report, such waiver, when accepted, will be deemed a part of the Standard

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Form of Contractor's Report of such contractor with the same force and effect as if it had been set forth therein when such report was filed. The exemption may be waived with respect to the receipts of accruals of the contractor in the fiscal year from sales of all articles or services within the scope of section 106(e) of the act; or the contractor may waive the exemption with respect to receipts or accruals in the fiscal year from sales of any such articles or services, without necessarily waiving the exemption with respect to receipts or accruals in such fiscal year from sales of any other of such articles or services. The exemption may be waived either individually or by class with respect to any articles or services. For this purpose, articles or services may be grouped into such product or service classes as the contractor uses regularly in its own accounting system.

(b) Limitations.-(1) A waiver made in the Standard Form of Contractor's Report shall be effective only with respect to the fiscal year to which such report relates, and shall not be effective for any other year.

(2) The exemption may not be claimed with respect to receipts or accruals under certain prime contracts or subcontracts for an article or service, and waived with respect to receipts or accruals in the same fiscal year under other prime contracts or subcontracts for the same article or service.

(3) A waiver of the exemption, to be effective, must be unconditional. The contractor Ishall not be entitled to state in its Standard Form of Contractor's Report or in its Application for Commercial Exemption that, if the Board denies the exemption with respect to certain articles or services, or classes thereof, the exemption is waived with respect to any or all other articles or services, or classes thereof.

(4) No waiver for any fiscal year may be made without the permission of the Board for any receipts or accruals with respect to which the contractor has previously filed an Application for Commercial Exemption for such fiscal

year.

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(5) Once made, a waiver of this exemption may not be withdrawn except with the permission of the Board, but shall not preclude the contractor from claiming the exemption for any subsequent fiscal year.

1467.24 The term "article".—(a) Scope.— Section 106 (e) (4) (A) of the act defines the term "article" to include any material, part, component, assembly, machinery, equipment, or other personal property. For the purposes of this exemption, the term "article" will be given a narrow meaning. When two products differ only in dimensions or size, or in any nonfunctional respects such as color or markings, and are sold at the same price, it will be considered that such products are a single article. If such products are sold at different prices, each will be considered a separate article. Similarly, if two products differ in any respects other than those indicated above, each will be considered a separate article, even though both may sell coincidentally at the same price. In determining whether prices are the same or different, volume or other discounts will be disregarded.

(b) Example.-If copper tubing is quoted and sold at a stated price per lineal foot, sales of such tubing are considered to be sales of a single article, although different customers may buy it in different lengths. On the other hand, and ignoring volume or other discounts, if 1-foot lengths of copper tubing are quoted and sold at one stated price, and 2-foot lengths are quoted and sold at a price other than exactly double, a difference in price exists and each such length of tubing is considered a separate article.

1467.25 Exemption of standard commercial articles. (a) Scope.-Section 106 (e) (1) (A) of the act exempts all "standard commercial articles," as that term is defined in section 106(e)(4) (B). This exemption is self-executing; it may be availed of by the contractor without application to the Board. However, the exemption does not apply and will not be allowed to the contractor in any fiscal year unless both of the two conditions prescribed in section 106 (e) (4) (B) are met with respect to

(4-10-65)