"An Inventory item is used against Warranty Service to Customer" - Any revenue is generated from this Transaction?

Simply no

No revenue is generated from this transaction. But satisfying customer will bring repeated sales.

but we see a weakness of service unable to repair the same product without issuing a replacement. This will result loss at the long run 

no revenue is already recorded when sales were made

No, it is an expenditure for a business.

Its will satisfy your customer but it wont generate any revenue.

I agree with Aziz the revenue is already done when sales were made