According to them, THEIR atf person says it has to go to ffl holder and another 4473 has to be done.

It would appear that this is a rule open to interpretation by the local office overseeing the area.....and in that area it has to go back to an FFL.

I deal with regulations like this, although not firearm related. It’s a pain and you are generally at the mercy of the inspectors interpretation and to challenge it becomes a legal battle not worth fighting.