Yes Naveen,
You are going in correct route for making the Process type as Non Stock for material. In addition to this check the process type indicator is set to true or false before saving the line item when item product is assigned to any material. So that if it is not set to false kindly make it to set false forcefully and then go for the account assignment process.
Try this out and let me know if it works or not.
Regards..
Hanu K