Cannot replicate, me and a friend were trying to upgrade a weapon using a conversion kit. It was an enchanted weapon with embers heat on it. We tried with unenchanted weapons as well, but it didn't work for those either. What is did was it would look like it took the levels (but the next time you got xp it would show up) and you would be holding the unupgraded (but still enchanted) weapon with your mouse. I can't remember if it also destroyed the upgrade or not. I have since upgraded to forge to 14.23.5.28.16 and it seems to work fine. not sure if it was related or not.

Modpack: Magiculture 2 - 0.6.0.5 + a few other mods
Minecraft: 1.12.2
Forge: 14.23.5.28.15
AbyssalCraft: 1.9.11