11 doesn't look right as a start position for SUP, but that might just be the way it is displayed here. Check anyway.
As Anuj says, the Record Descriptor Word is, well, it's a word long (four bytes). So your first parameter should start with 5, not 4, although it should have no affect on the processing. So, the position of SUP looks wrong, and a valid-looking statement isn't working. Check. 4 for RDW, then however many until your field starts - it looks less than 11, anyway.
It looks all messy when I look inside the "code" block. For some reason HEX and SCALE don't work on my browser.
I think the squirly bits of display are data, as otherwise the record-length has run into the IOCS, which it won't.
How about, I don't like suggesting, splitting in two just to find out which is working.
Also, check your JCL. I have known people to have DISP=(NEW,CATLG) and leaving uncatalogued datasets lying around with the latest data in, but they continually look at the catalogued one and can't understand why no changes take place. DISP=MOD might play similar tricks (I don't know specifically from a modern SORT).
Any thoughts on my suggestion to submit the two parts of your condition seperately to find out if they are working? They will either both work individiually, or one will work, or the other will work, or neither will work. Whatever happens, we will have more information to work on.
I was asking if you had swapped the conditions around because you were aware of a particular problem with coding them the other way.
Although your input file looks different, your parameters should help the TS to get somewhere as, as you say, one record has been deleted (I assume you have checked that it is the correct one).
The (1,32000... will start the search in the Record-length/IOCS (Record Descriptor Word/RDW) where you will not find C'<FSA>'. Later, someone looking at the code will wonder why you did that. It should be (5,32000... so that is starts instead in the data.
So, Shan, back to you if you haven't already fixed it. I'm thinking JCL...