You are using wrong schema xmlns
It should be changed to :
<jboss-deployment-structure xmlns="urn:jboss:deployment-structure:1.1"> OR <jboss-deployment-structure xmlns="urn:jboss:deployment-structure:1.0">
Refer to "jboss-as-7.1.1.Final/docs/schema/jboss-deployment-structure-1_1.xsd" and "jboss-as-7.1.1.Final/docs/schema/jboss-deployment-structure-1_0.xsd"
Yeah, Issue fixed when I replaced jboss:deployment-structure:1.2 with jboss:deployment-structure:1.1. It looks like 1.2 is supported from version AS 7.1.2.
I referred https://docs.jboss.org/author/display/AS71/Class+Loading+in+AS7 and later found that it is based versions from AS 7.1.2