A Line Mechanic was informed the Abradable Shroud putty compound repair he and another Mechanic had applied to a CFM-56 Engine Fan Case was considered not acceptable by an FAA Inspector; the compound was not smooth enough. His Maintenance Manager pulled the B737-700 aircraft from service prior to revenue flight and corrected the problem.

Narrative

My partner and I (Mechanic Y) were assigned a Maintenance Check [on a B737-700 aircraft]. Through normal inspection we found we needed to change two main tires and two nose tires and other various items. A third guy (Mechanic Z) came over to help us. I decided to work the Abradable Shroud on [the] # 1 Engine. Per the Aircraft Maintenance Manual (AMM); it says remove sufficient number of [fan] blades to access repair area [of Abradable Shroud]. I told my Supervisor to pull the Maintenance Task [Jobcard] for Fan Blade Removal. Mechanic Z told me he could do the repair without removing fan blades. He put the putty compound in the repair area. After he was finished; he went to his airplane and I agreed to finish the repair; which involved curing the repair with heat lamps; freeing the fan blades if they were stuck and cleaning up associated mess; which I did. This process took a total of five hours. Through consultation with my Lead Mechanic and three other mechanics; I determined that the repair was acceptable. I later found out that the FAA decided it was not acceptable; it was not smooth enough; thus leading to an investigation. I was unaware that there was a problem with the repair until after my days off. I found out our Maintenance Manager pulled the airplane from service before revenue flight to correct the problem; thus leading to a fact finding meeting.