I enter first time and works fine, but second time? Boom, it fails!
What is wrong
Best regards:

#Global values
#key is ID/name and value is cost
product = dict()
identity = dict()

#Function to check and add product and its ID
def get_prod():
 #anything can be a name
 prod_name = raw_input("Please Enter Product Name(Any name if don't remember)\n" "That requires you to remember ID : \n ")
 #filter out -ve and alphabet for ID
 try:
  a= int(raw_input("Please Enter ID \n" "Must be correct if name was not : \n "))
  if a>0: # a is not negative
   prod_id = a
  else:
   int("s") #rise exception purposely since s is string and cannot be used with int() function
  #exception message
 except:
   print "Error: Only Non negative integers for product ID"
  
 #filter out -ve and alphabet for Number of Items
 try:
  b= int(raw_input("How many %s(s) do you need: \n" %(prod_name)))
  if b>0: # a is not negative
   prod_quant = b
  else:
   int("s") #rise exception purposely since s is string and cannot be used with int() function
  #exception message
 except:
   print "Error: Only Non negative integers for product ID"
 return (prod_name, prod_id, prod_quant)# Return tuple of three values


# Function to update dictionaries 
def add_prod(prod_name, prod_id, prod_quant,prod_cost):
 t_cost = (float(prod_quant)*float(prod_cost))#cost =quantity x cost per product
 global product, identity
 product[prod_name] = t_cost
 identity[prod_id] = t_cost
 

#function to get costs form the file and present arguments for above function
# no error trapping though if somebody enters non existing value
def prod_cost(prod_name, prod_id):
 fo = open('stock.txt', 'r')
 
 prod_cost = 0 # intitialize to avod declar error
 for line in fo:
  a,b,c = line.split(",")# separate id, name, cost by comma
  if (b == prod_name or int(a) ==int(prod_id)) :
      prod_name = b
      prod_id = int(a)
      c_pro = c.strip("\n")#remove \n character from c
      prod_cost = (c_pro)
      return (prod_name, prod_id, prod_cost)

 
#Main program calling functions to do a given task!!
""" First we need to call a function to prompt user to enter values
That function is "get_prod()"
So we call it and it returns a tuple that have all values respectively (prod_name, prod_id, prod_quant)
use while loop until custome says exit"""

while True: 
 tuple1 = get_prod()
 name, ident, quant = tuple1

 #Our add function needs four arguments but takes two args and ruturns three [the fourth is unused one among those returned by get_prod() i.e prod_quantity]
 # so we want to know cost, so we call prod_cost() passing args
 tuple2 = prod_cost(name, ident)
 prod_name, prod_id, prod_cost = tuple2

 # Take all four arguments and use them in add_prod()
 add_prod(prod_name, prod_id, quant ,prod_cost) 
 print product
 print identity 
 exit = raw_input("Need to Add more?  y/n:\n")
 if exit=="n":
  False

Sorry I forgot to attach it, and until I got home...anyway it have something like
001, pepsi, 9.00
002, coca, 18.00

Like simple database for comparing with user input to get price

Your problem is that you've got prod_cost as both a function and a variable. So once your assigning a value to prod_cost, it removed the definition of prod_cost as a function.

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