This should work:
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
<xsl:template match="INVENTORY">
<INVENTORY>
<xsl:apply-templates/>
</INVENTORY>
</xsl:template>
<xsl:template match="ITEM">
<ITEM>
<xsl:for-each select="*">
<xsl:attribute name="{name()}">
<xsl:value-of select="text()"/>
</xsl:attribute>
</xsl:for-each>
</ITEM>
</xsl:template>
</xsl:stylesheet>