Ruthika,
It must be due to settings in OIS2 spro tcode, where for your Equipment Category, the MMSL setting for EqReqfield might be '2'. If it is so, setting the value to '1' would not force you to create an Equipment while doing GR. See this picture.
This is reply to your specific query. Discuss with your MM team too. Refurbishment being a deep integrated process especially with MM and FICO, the first time process cycle involves research. Please note that every aspect of Refurbishment has been discussed multiple times in this forum. So try to find answers from previous discussions..
Good luck
KJogeswaraRao