Question about a call?

[Coach Strong]

Punt team on the field,(Team P). punting to team R. P punts football it goes straight up and back down behind the line of scrimmage. When coming down it hits one of team R's Big Sloppies up front, that was too lazy to get in the wall. Big Sloppy is behind the LOS. What is the ruling here. I think it should be treated as a blocked punt since it didnt cross the LOS. the officials on the field informed the coaching staff that the LOS was irrelevant in this situation and that it was a fumble and since P recovered the fumble is was their ball 1 and 10. The key though is it never crossed the LOS or the to gain marker. I thought they blew it, but that was me. I guess I should be complaining about the signal for both split ends on the LOS and then the covered TE that scored the TD out of that set, anyway could someone respond and give me an answer please.