SP A154 reads: ?gLithium batteries identified by the manufacturer as being defective for safety reasons, or that have been damaged, that have the potential of producing a dangerous evolution of heat, fire or short circuit are forbidden for transport?ie.g. those being returned to the manufacturer for safety reasons?j?h.
It is incorrect to add one?fs own interpretation such as outside appearance or there is no evidence of scorching. Such interpretation is not written or suggested in SP A154. Both ICAO and IATA are focusing special attention on lithium batteries because of the many incidents. The fact that Note 2 following DGR 2.11 Dangerous Goods Forbidden in Aircraft Under Any Circumstances which reads: ?g2.1.1 is intended to include articles being returned to the manufacturer for safety reasons, e.g. defective lithium batteries, see Special Provision A154.?h speaks for the elevated concern.
From a safety standpoint, it is advisable not to do things which you are not certain of. Since the root cause of the malfunctioning of the equipment cannot be ascertained whether it is the lithium battery or the equipment itself, it is recommended to remove the lithium battery from the equipment and return just the equipment without the lithium battery.