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As of now upload from 2007 + Excel is not supported.
Planning worksheet which was created through UI was .xlsm file, so after changing site.properties to use vba_base.xls file as base workbook, it was not creating .xls workbook.
So, Save as .xls for all planning worksheets and changes in site.properties to use vba_base.xls rather than default vba_base.xlsm.
Thanks Joe for help.
If you take the latest iop drop then you will be able to get support for excel 2007/10.