Hi Abhishek!
I guess there are two ways to fix it:
1. Import Saxon XSLT processor and use it for your XSLT transformations.
2. For current Xalan processor try following syntax in your transformation:
xmlns:testclass="xalan://pack_java_within_xslt.Class_java_within_xslt"
But first try to remove "//" from namespace definition.
Before:
xmlns:testclass="java://pack_java_within_xslt.Class_java_within_xslt">
After:
xmlns:testclass="java:pack_java_within_xslt.Class_java_within_xslt">
Regards, Evgeniy.