Factory-gate valuation of slag requires tender price plus segregation cost, not unrelated skull scrap pricing.

Slag cleared from slag heaps was to be valued on the basis of the tender sale price at the factory gate, with segregation cost included in assessable value because it was incurred up to clearance and enhanced the value of the goods. Skull scrap obtained from broken ladles could not be used as a comparable benchmark, as it was a different product arising from a different process. On that footing, the proper valuation basis was the tender price plus segregation cost, not the price of skull scrap.

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Issues: Whether slag cleared from slag heaps was to be valued on the basis of the tender sale price plus segregation cost, or by reference to the price of skull scrap obtained from breaking unusable ladles.

Analysis: The goods were sold by tender to unrelated buyers on principal-to-principal terms, and the value had to be determined in the form in which the goods were cleared at the factory gate. The slag from the dump yard and skull scrap from broken ladles were found to be different products arising from different processes, so skull scrap could not be treated as comparable goods for valuation of the slag. At the same time, costs incurred up to the point of clearance that enriched the value of the goods, including segregation cost borne in the process of sale, were required to form part of the assessable value. Applying these principles, the tender price together with segregation cost was accepted as the proper basis for valuation.

Conclusion: The valuation of the slag was to be based on the tender sale price plus segregation cost, and not on the price of skull scrap.

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