A judicial commissioner ruled there was no conclusive evidence that the South African seamer's contact with Steve Smith in the second Test was deliberate.
Rabada had been found guilty of a level two offence by match referee Jeff Crowe in the wake of the match, calling for a sanction of three demerit points that triggered a two-Test ban.
However, Rabada challenged the verdict, arguing that the shoulder contact was accidental in an appeal hearing that lasted almost six hours on Monday (March 19).
His case was delivered by advocate Dali Mpofu and heard by judicial commissioner Michael Heron over a video call. Heron decided to overturn Crowe's verdict and downgrade Rabada's charge and sanction to a level one offence.
Although the fast bowler still picked up one demerit point and was fined 25% of his match fee, he will be able to play the third Test at Newlands on Thursday because his accumulated total of seven demerit points falls short of the eight-point mark that carries a ban.