ORA-12480: specified clearance labels not within the effective clearance
Cause : You specified a clearance range that was not within your authorized clearance; you can only specify clearance ranges that are within your clearance.
Action - How to fix it : DBA Scripts :: www.high-oracle.com/scripts
Specify clearance labels that are within your own clearance range.
Well, the reason for above error is that i have taken the above script from a 11g database and running it on 10g database. 11g has bring some changes in password management. Below code is executed on 11g and user created successfully, which is expected result.