Did you reject them in X3 using the QC module? Also, what version of X3 are you on?

Yes, rejected through QC. Using v7 version. It seems that, rejected material will be in inventory as ''R'' status also goes to analysis request. Need to clear from analysis request in order to use it again? Also, how can I get a report for all materials in R status?

I suggest you to change the stock in R status (or a dedicated sub-status to clearly identiyf the stock for rework such as RR - Rejected for Rework -) using QC. Then you can create the work order(s) that will remix this stock and edit the Components of the work orders (and operations?) to include the Rejected stock as component. If editing component if forbidden on the routing, you can create a dedicated REMIX routing authorizing such changes.

I suggest you to change the stock in R status (or a dedicated sub-status to clearly identiyf the stock for rework such as RR - Rejected for Rework -) using QC. Then you can create the work order(s) that will remix this stock and edit the Components of the work orders (and operations?) to include the Rejected stock as component. If editing component if forbidden on the routing, you can create a dedicated REMIX routing authorizing such changes.

Thanks for reply, however i have bit more doubts:

As you suggested, I can create a new category and product code for rejected material(FG) from QC.

In order to move the rejected product to above new product(RR), either I can do an assembly or to tale as a component in new workorder. But, the problem facing is, if the product in in 'R'status, will not be able to do assembly or use as a component.

If accept in QC, then assembly will be a problem  as this lot can be sold while creating a delivery to customer.

Please suggest a solution.

Not quite-- you can update the product category for the particular issue flow for that product category so that you can use an R status in a work order. See screen shot of Common Data > Product Category