Root cause : CLM RDS 4.6.00 is pretty much out of sync with AWS offerings (since it's released pretty long back, and one need to update it to latest). For example. in RDS 4.6.00 you can see the configuration as 1 CPU , 0.62 GB RAM for t1.micro. However in reality in current date there is no such offering in AWS.
To make it work, go to service designer, and in the blue-print, change the RAM from 0.62 GB to 1024 MB.
So now, when end user orders this offering, CLM computes resources and check the offering with 1 CPU and 1 GB RAM in AWS, and automatically resolves it with t2.micro.