Shyam,
After looking at the code definitions, the only way I can see that failing is if there are no serial numbers in the collection. The target will be empty and it would cause your failure. The rule below appears to have a flaw that would allow this.
Make this change to the EvalLastSerialNumberisNull rule by pasting this source into the Rule text (Advanced) for the rule and pressing the Update button:
(@AND (@TYPE :>1"Material">12"SerialNumbers">1L0) #20 (@EQSTR :>1"Material">12"SerialNumbers">1L0>12"SerialNumber" (('))))
The TYPE function change will check to make sure there is at least one serial number in the collection before trying to delete it.
Let me know if this change fixes the problem.
Jason Latko - Senior Product Developer at SAP