Hi Sush,
First have a look on OSS note 723180 - CO08: Error CO684 when creating production orders.
Go to t-code OKKP select your the controlling area, then select activate component controlling indicator double click on it ., then you will found sales order check box its should be active for your controlling area.
Apart from that check your strategy group and settlement rule .
Regards,
R.Brahmankar