Coming to this late...
But your formulation contained an ingredient not displayed on the label.
It was an accident. At this stage, no fraud.
The senior leaders want to avoid waste. Asking you to determine if it's grey area (we all know this exists). You say no because the formulation is wrong.
At that point, the leaders are asking your staff to falsify records if they had gone ahead with it as presumably you would have labelled this batch, put in delivery notes etc.
Would I have used the term "fraud" to describe this with them? No if I'm honest but to the letter of the law you are right.
I think there is a difference in using the law vs using influencing skills to get to the decision which protects the customer and consumer. I would have used the latter and asked the leaders to imagine a situation where this was unearthed accidentally either by your customer, or an audit etc. Yes it's remote but not impossible. Depending on what that goes into, HPLC would pick it up for example. People can have adverse health effects from too much vitamin C, yes they're mild (diarrhoea etc) but they're not nothing.
So imagine it's found out... then the customer or regulators come back, see your production records and comms on the issue and know you sent it out knowingly.
That way the leaders would see on their own without my having to point it out to them, that they would be in the dock defending this position, perhaps literally...
