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If we use the famous package org.apache.commons.lang3 library and modify it as below jarjar configuration;

'rule org.apache.commons.lang3.** com.sample.internal.org.apache.commons.lang3.@1'
  1. Does this violate the "AS-IS" term of the license?
  2. Should we include an additional modification note for it?

For reference, the included lang3 apache license is here

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Note: I am not a lawyer.

You are misinterpreting the "as-is" clause. "As is" does not mean you cannot modify the code (such a clause would, in fact, go against both the spirit and the letter of the Apache License). "As is" is a clause that states that the code you're using is what it is, and you need to execute your own due diligence when you use it. E.g., you cannot sue the Apache Foundation if a bug in Commons Lang crashes your application. Wikipedia's article, while not a legal source, explains this concept quite nicely:

As is is a legal term used to disclaim some implied warranties for an item being sold. Certain types of implied warranties must be specifically disclaimed, such as the implied warranty of title. "As is" denotes that the seller is selling, and the buyer is buying an item in whatever condition it presently exists, and that the buyer is accepting the item "with all faults", whether or not immediately apparent. This is the classic "buyer beware" situation, where the careful buyer should take the time to examine the item before accepting it, or obtain expert advice.

By renaming the package, you are creating a "Derivative Work" of Apache Commons Lang. Section 4, Redistribution of the APL-2 clearly states what you need to do in such a case:

4. Redistribution. You may reproduce and distribute copies of the Work or Derivative Works thereof in any medium, with or without modifications, and in Source or Object form, provided that You meet the following conditions:

A. You must give any other recipients of the Work or Derivative Works a copy of this License; and
B. You must cause any modified files to carry prominent notices stating that You changed the files; and
C. You must retain, in the Source form of any Derivative Works that You distribute, all copyright, patent, trademark, and attribution notices from the Source form of the Work, excluding those notices that do not pertain to any part of the Derivative Works; and
D. If the Work includes a "NOTICE" text file as part of its distribution, then any Derivative Works that You distribute must include a readable copy of the attribution notices contained within such NOTICE file, excluding those notices that do not pertain to any part of the Derivative Works, in at least one of the following places: within a NOTICE text file distributed as part of the Derivative Works; within the Source form or documentation, if provided along with the Derivative Works; or, within a display generated by the Derivative Works, if and wherever such third-party notices normally appear. The contents of the NOTICE file are for informational purposes only and do not modify the License. You may add Your own attribution notices within Derivative Works that You distribute, alongside or as an addendum to the NOTICE text from the Work, provided that such additional attribution notices cannot be construed as modifying the License.

You may add Your own copyright statement to Your modifications and may provide additional or different license terms and conditions for use, reproduction, or distribution of Your modifications, or for any such Derivative Works as a whole, provided Your use, reproduction, and distribution of the Work otherwise complies with the conditions stated in this License.

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