How to reuse a previously issued serial number

Hi, we have a situation where an Items serial generation is set at material issue(WIP issue/Misc issue/SO).

Lets say Item ABC is issued to a work order with serial S001. The completed item is XYZ.

Later, a conversion WO was created to convert XYZ back to ABC. Here component issue is for XYZ with same serial S001.

At this stage, item ABC is available on-hand with serial S001(physically)

Now when try to do a wip issue of item ABC with serial S001, it is throwing an error as "The serial number S001 status is invalid". When I check the serial status, it is Active and usage is "Issued out of stores". But physically the serial is available on-hand.