Water damage after screen replacement?

We have an iPhone 13 that got dipped in water for less than a second and started having issues. It is supposed be able to be submerged to a depth of 6 meters up to 30 minutes as per Apples documentation (About splash, water, and dust resistance of iPhone 7 and later - Apple Support). The technicians at Apple told me that the water ingress indicator inside the phone gone off and they would not replace phone. The screen had been recently replaced and my only conclusion was that it was not properly sealed during the replacement. The apple store personnel told me that the phone was only water resistant and would not replace the phone. Is Apple not standing by their IP68 rating for repaired phones?

We have a apple care plan and payed for the replacement. Should not Apple have offered a replacement at no cost?