Hi,
While I do not know very much in detail about the Taxation and Indian Excise rules in India, I think what Jyoti has pointed out about the duty amount payable to the Govt. is most likely the scenario you still have to deal with.
Normally, there are two scenarios in the case of FOC Orders:
1) The Item is Free to the Customer but the customer has to pay the Taxes pertaining to that;
2) The Item is in essence totally Free to the Customer and he does not have to pay anything even the taxes. That being said these Taxes have still to be paid by the Client/Company as they are due to the Govt.
I think you are referring to the Second Scenario. Assuming that being the case, what you are looking for probably is that the Promotion Account has to be hit with the Tax Amount and the Customer Reconciliation Account has to be zero.
Am I correct so far ??
We may have a work around here.
Thanks.