H1 old petition expired and not used. Eligible for non cap?

[Ambilyrnair]

Hi,

I am a L1A visa holder and entered country on Oct 10th 2012. I have visa valid for 3 years and also I-94 till Oct 11 2015.

I have an old H1 petition which was approved in 2012. This got expired in Nov 2012 and was never used.

Now I am in US and my company tried to file for non-cap H1 with COS which went to RFE. RFE was that I entered US in L1 then how is this transfer to H1 possible.

Employer responded that petition was not revoked by company and hence they are requesting for this non-cap H1 with COS.

But this was denied by USCIS stating that I have not utilized the petition when it was approved.

I want to know if I am eligible to fall under non-cap H1 , since I have already had a petition approved in the past even though I never came into US in H1. Please advise.