Guessing you might be using it on a younger account or the tool is not completely empty of charges?
From:
http://www.uoguide.com/Weapon_Engraving_Tool
Can be recharged with the Tinkering skill once the tool has been completely drained of charges.
Requires a Blue Diamond to recharge to 10 charges.
Simply double click on the tool once it has been depleted to recharge.
The account of the tinker must be 96 months or older.
Alternatively, one may recharge the tool by visiting a Tinker Guildmaster and opening a Contextual Menu on them and selecting "Recharge Weapon Engraving Tool"
Again, the account must be 96 months or older.
This method too requires a Blue Diamond in addition to 100,000 gold coins.