Inventory valuation

In Plastic molding company regrinded material is generated during two process

1. During produciton of FG and

2. After grinding rejected plastic FG/SFG

Question is How to value this regrinded material  as per AS -2.

One view is that if this is grinded material and does not fetch the same value in the market as original material. so its should be valued at Net realisable value.

Other view is that if this regrdinded material can be used for production again then it should be valued at original raw material cost.

Which view is correct? Please provide your opinions.

Its very urgent.

Thanks and Regards

CA Ajay Tarate