@VenkataBhargaviG are you using Pega Personal Edition?

Did you already check other suggestions via the PSC search eg this and this?

Can you check the File name parameter. Instead of using the complete system path, use something like file://web:/StaticContent/global/ServiceExport/MSOData.xlsx.

Also note:

MSOParseExcelFile is a final internal activity. That means for internal purpose. So, this cannot be used directly the use case.  It is also deprecated.

Have you checked the pxParseExcelFile activity instead?

Activities for integrating Cases with Excel documents

Also make sure the file is not read-protected.  

This was found by a client who was creating a binary file and uploading a excel template into it. Then Client was using the Activity pxParseExcelFile to read and parse the excel data to clipboard. Client was trying to attach a excel file which is password protected in the case. It displayed error like "The uploaded file template could not be recognized. Please upload a valid file. Refer to template for details". If client tried to upload a normal excel file, then it worked fine for them.

Note: As password protected file cannot be read by pxParseExcelFile API. This is an  expected and existing behavior.

There is an open enhancement: FDBK-84360 (PEGA Activity pxParseExcelFile doesn't read protected Excel file)