Credit Notes Received from Suppliers

How do I enter credit notes received from a supplier?

Go to relevant invoice, click on more options, pick credit note from drop down menu and enter credit amount if its not in full

Can I modify an already created Credit Note-by way of changing the “Category” ?

Credit Notes are non-editable. You would need to delete it and recreate it, then you can select the category.

If you don’t want to recreate you can just issue a journal to move the balance.