Why is RewriteEngine not working in apache?

Question

Apache HTTP Server

I use this code in site-enabled

<VirtualHost *:80>
        ServerName site.net
        ServerAdmin [email protected]
        DocumentRoot /var/www/site
        ServerAlias *.site.net
        RewriteEngine On
        RewriteCond %{HTTP_HOST} !^www.site.net$
        RewriteCond %{HTTP_HOST} ^((.*)\.)site.net$
        RewriteRule ^/(.*) /%2/$1
</VirtualHost>

and on my server subdomains work fine, but on the customer's server when switching to a subdomain

Cannot access site
The DNS address of the dev.site.net server could not be found.

Any ideas why that is?