Hi Vasu,
COGS account is a cost element and category should be "1" not 12.
01: Primary costs / cost reducing revenues: This cost element category can be debited for all primary postings, for example, in Financial Accounting (FI) or in Materials Management (MM). Cost-reducing revenues are revenues that are to be handled in CO similarly to overhead costs, and which reduce the prices of an activity type or the costs to be assessed.
This is the case, for example, with rent revenues, which reduce the room costs to be assessed. Cash discount amounts and exchange rate amounts are also cost-reducing revenues.
Note: In contrast to revenues of cost element category 11, cost-reducing revenues in the CO module are typically assigned to cost centers. Note that when you use Profitability Analysis (CO-PA, costing-based) these cost-reducing revenues can only be transferred to Profitability Analysis during secondary allocations and not during invoicing.
Example : 12: Sales Deductions : Used to post deductable items (sales adjustments, sales corrections) such as discounts and rebates. Certain deductable items (freight charged separately in the invoice, surcharges for small quantities, special orders) are not classified as sales deductions, but as revenue elements. You can use this category in the same manner as revenue elements (category 11). Values on cost centers are displayed as statistical only.
Thanks,
Rau