Yup, they were wrong there.
PA law says that all replaced parts still belong to the owner of the vehicle until and unless they are "released" for disposal.
The shop doing the work is under no obligation to offer to return replaced parts (except in situations where it should be obvious like switching from summer to winter tires and back) and an implied release of parts is given if you pick up the vehicle, pay the bill, and drive off the lot without asking for your old parts back.
My understanding of the statute in this case is, that if you had provided them with rods and pistons to be balanced to the crank and you were returned none of, or only a portion of those parts they do now owe you a set that is at least as complete and functional as what you provided them. So for instance if you brought in your set of rods/pistons which were weight-matched and they damaged or lost one they can't just grab a piston out of another set that is 2 grams off, give it to you, and call it good because that weight difference is out of spec to the rest of the set, ie "not as functional as the original".