We spent long time to find the reason, but in vain. Since time was not permitting, we adopted bad approach - solution without proper problem. When you get this exception, certainly application is not able to find the class definition of TransformerFactoryImpl. Bad Solution we found was add xalan.jar in the library and then it worked.
Bonus tip - You must be knowing already, if you need any jar file, just go to http://www.findjar.com/ and you will find everything you need.