You seem to be confusing two separate but easily confused functions, condemning the tank and removing the tank from DOT service, and removing the tank from general service.
A DOT-licensed test station has the legal authority and, as you correctly point out, obligation to condemn tanks that fail the recertification procedure, so they can no longer be used in DOT-regulated commercial service. This is correctly done, as has been pointed out here many times, by either obliterating the markings or stamping the tank "condemned", but NOT by destroying the or rendering it unservicable. Once this is done that tank has lost its special status as a DOT tank and the DOT and DOT- licensed testers no longer have any statuatory authority over the tank.
So the owner of a tank which has failed an annual - as opposed to the visual inspection that is done as a part of recertifying a tank at hydro time - is not just entitled to have the tank returned after it is destroyed - they are entitled not to have it destroyed at all!
An tester can, at his/her option, and with the consent of the owner, procede to render the tank unusable, but in doing so is no longer acting in any legal or official capacity. It is purely a private option, much if they choose to make a sculpture or the tank, or sell it to a dive operator in Bangladesh. The inspector is no longer acting as a DOT-licensed inspector, but as an individual, under whatever private arrangements the tester has made with the tank owner.
There is also often some confusion regarding the DOT-mandated visual inspection that is done at hydro time, and the annual inspection common in the dive industry. These are not the same thing at all! The inspection done at hydro time by a DOT-licensed recertifier has the force of law behind it, which gives the inspector the power to "really" condemn the tank. The annual scuba visual inspection done by a PSI-trained, or field-trained inspector is done as a community standard, and has no legal mandate or statuatory authority behind it, so the inspector does not have the power to absolutely condemn a tank in the same legal sense as a DOT-licensed inspection station does during recertification.
Aqua Marine:
A visual inspector is not only allowed to condemn a cylinder he is required to by federal law (CFR 49). They must have prior owner consent and this is typically contained within the wording on the work order. They are not allowed to return it to the customer in a condition in which the customer could have it refilled.
A cylinder can be condemned on a visual inspection, a Hydrostatic test, or an eddy current test (vis plus) failing to meet the required minimums.
You most definately have a right to see and be explained why the cylinder was condemned and to have it returned to you after it has been destroyed.
As far as LDS condemning cylinders in order to sell you a new one, you are relying on the integrity of the shop. If they are not trustworthy, don't do business with them.
I am a PSI Inspector Instructor and teach Visual Cylinder Inspection courses and Eddy Current Technician courses regularly. Please feel free to Email me with any questions.
There is a lot of mis-information and deceptive trade practices going on, you are right to be concerned.
