Try:
printf %b 'ac s\nbc s\ncc s\n' | xargs -d '\n' bash /tmp/test.sh
You neglected to quote the \n passed to -d, which means that just n rather than \n was passed to xargs as the delimiter – the shell “ate” the \ (when the shell parses an unquoted string, \ functions as an escape character; if an ordinary character follows the \ – n in this case – only that ordinary character is used).
Also heed @glenn jackman’s advice to double-quote the $@ inside the script (or omit the in "$@" part altogether).
Also: xargs -d is a GNU extension, which, for instance, won’t work on FreeBSD/macOS. To make it work there, see @glenn jackman’s xargs -0-based solution.
Note that I’m using printf rather than echo to ensure that the \n instances in the string are interpreted as newlines in all Bourne-like shells:
In bash and ksh[1], echo defaults to NOT interpreting \-based escape sequences (you have to use -e to achieve that) – unlike in zsh and strictly POSIX-compliant shells such as dash.
Therefore, printf is the more portable choice.
[1] According to the manual, ksh‘s echo builtin exhibits the same behavior as the host platform’s external echo utility; while this may vary across platforms, the Linux and BSD/macOS implementations do not interpret \ escape sequences by default.