We discussed with the customer and got no logical feedback. However, coming to squeezing the tolerance; we may have to accept as it became customer’s requirement.
On the other hand; my question is; are they not confident is their design engineers and application engineers who had accepted the tolerance for good quality. “Tolerance is that acceptable limit from the ideal dimension”. Why it is not being considered during design stage?
From the story you have laid out here in this thread, I would not seek to find logic in the situation. Your customer seems to have no idea what they want, do not wish to find out (maybe they do not have the resources to apply, or the statistical knowledge to figure it out).
“Tolerance is that acceptable limit from the ideal dimension”
assuming you know
all of the ideal dimensions. Often we do not have that luxury - especially if there are physical interactions. They do not know them, and it sounds like they have given up looking.