The upper is not defective. There’s lots of 416A4 uppers out there that had the larger barrel extension index location. If you can get it torqued down without it rotating, then it will be fine and I doubt it would move after being torqued down. Best bet is to make a small indexing plate out of steel or aluminum so you can keep the index pin centered while torquing. You can make one with a piece of steel or aluminum and a dremel fairly quickly.