I think I figured out the problem I was having. The FCM is correctly reading the precedence_rules.csv file, but it supports precedence rules only for root level dimensions. I was able to create a prule for "product.category" (It is NOT an autogen dimension) which is an dimension created by the ATG indexing components.
It supports prules mapping for dims created in dev.studio and those created from the ATG side and vice versa.
When i tried to add the "product.category/accessories" as the src dimension in the precedence rule, it is not working. "accessories" is a dimval under "product.category" and it doesn't have an entry in the app's CAS schema record store. I guess this is the problem which is preventing me from adding prules to the dimval.
If anyone was able to create precendence rule for a dimval, please let me know.
Any help would be greatly appreciated.