Query on H1B extension visa stamp and DropBox


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I have received an approval notice for my H1B extension petition for another 3 years and I am going to India for visa stamping.

I have following questions:

1. During my previous H1B stamping (less than 3 years ago), the visa officer told me to get a new passport for stamping because it looked old and damaged.

So he gave me 221(g) and checked the "New Passport" option. I submitted my new passport and received the stamped visa in less than a week. so my visa was approved finally.
Now, when I am filling DS-160 form, there is a question that asks if I ever had any visa refusals ->

Should I say "YES" and explain that it was due to damaged passport and that it got approved upon submitting the new passport ? OR

Should I say "NO" because visa application was eventually approved ?

2. I checked the elligibility criteria for Drop Box Interview Waiver program at http://www.ustraveldocs.com/in/in-niv-visarenew.asp and have a query regarding one of the criteria.
The criteria is : "I have no refusals for a visa in any category after my most recent visa issuance" and "My most recent visa application was not refused."

Since my most recent visa (i.e. H1B) was approved and don't have any refusals after that, can I say "YES" ? I am anxious because of the 221(g) I received due to a damaged passport in the past. 

Please advise. Thank you very much for reading the post.


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