>What is the scenario where this would be reversed?

If the customer change mind after the item is issued from inventory but
the shipment still not packed(invoice not created) then there is no way
to remove the item from shipment and from the future invoice that will
be created. The only solution is to create an order return and invoice
for it. 
I'd like to cancel the issuance if the shipment is still not packed, and
not to invoice that item.

Are the steps mentioned in my previous email fine for this scenario?

Thanks for your reply
Bilgin

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