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If you know relative filename of intermediate file, try

tar -xf $1 -O path/to/file.tar.gz | tar xf - 

where

 -O, --to-stdout Extract files to standard output. 

1. you might need -z flag in second tar

2. please note that - is synonym for stdin, maybe that what you meant (tar -xf $1 | tar -xf xargs (*) ) ?

   tar -xf $1 | tar -xf - 

(*) xargs is backquoted

If you feel adventurous, you can also try option --to-command=COMMAND

tar -xf $1 --to-command="tar -xzf -" path/to/file 

1. I advise to test before going "production"
2. Do not use absolute path