2018 (5) TMI 646 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (13) G. S. T. L. 65 (A. A. R. – GST) – Classification of Caesarstone – an article made from artificial stone – MGST Act – whether the product “Caesarstone” imported by the applicant can be classified under HSN Code 2506 or 6810?
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Held that: – Chapter 25 covers the naturally occurring quartz which has undergone changes without changing the structure of the product. The way the impugned product comes into existence should leave no doubt that the same would not be covered by the Chapter 25 and the Heading 2506. The rules for interpretation of the Customs Tariff would not apply herein as the Chapter 25 specifically excludes goods of the nature as the impugned product – the impugned product would not be covered by the Heading 2506.
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The entire description as appearing in the Customs Tariff Heading 6810 has been taken for the purposes of the GST entry. It, therefore, means that all item falling in the Customs Tar
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, HTSUS, which provides for other articles of artificial stone.
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Ruling:- Caesarstone imported by the applicant is to be classified under HSN code 6810. – GST-ARA-10/2017/B-13 Dated:- 20-3-2018 – Shri B.V. Borhade, Joint Commissioner of State Tax and Shri Pankaj Kumar, Joint Commissioner of Central Tax PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as "the CGST Act and the MGST Act"] by Hafele India Pvt. Ltd., seeking an Advance Ruling for determination of the correct classification of Caesarstone under the MGST Act. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically m
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rtation of kitchen and bathroom fittings along with furniture and other home accessories (hereinafter called as goods) for onward selling. The Petitioner while importing these goods is subject to Basic Customs Duty and Integrated Goods and Services Tax ("IGST") under Customs Tariff Act, 1975 on goods cleared for home consumption. 3. The Applicant also imports Caesarstone quartz surfaces (hereinafter referred to as "Caesarstone/impugned goods") for onward sale to domestic customers in India. The Applicant while importing the impugned goods is liable to pay Basic Customs Duty, Integrated Goods and Services Tax ("IGST") under Customs Tariff Act 1975 on goods cleared for home consumption. Further on making the outward supply of the impugned goods, depending on the nature of supply, the applicant is liable to discharge the applicable tax i.e. Central Goods and Services Tax ("CGST") and State Goods and Services Tax ("SGST) or IGST as the case may
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e Schedules has been aligned as per the classification adopted in the tariff entries provided under the First Schedule of the Customs Tariff Act, 1975 (hereinafter referred to as the "Customs Tariff Act"). However, in certain cases, there is an inconsistency in classification, resulting in a situation wherein the goods could be classified in a different heading for import whereas the same may fall in the different entry under the respective states schedule for levy of tax on outward supply. Considering the said inconsistency between the classification of the product as per the GST rate Schedule vis-a-vis the Customs Tariff Act Schedule, it becomes necessary for the Applicant to re-determine classification of Caesarstone under the GST regime instead of continuing the classification adopted under the pre-GST era. 7. Based on the examination, the Applicant realized that Caesarstone merits classification under HSN 2506 or 6810 of the GST Schedule. At the time of importation, the
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and Services Tax Act 2017 ("CGST Act"). For ready reference, these conditions are reproduced hereunder: a. The Applicant has obtained registration in Maharashtra and would therefore be covered within the scope of the term "applicant" as defined under Section 95(c) of the CGST Act; b. The question on which advance ruling is sought is in relation to the classification Of Caesarstone thereby fulfilling the condition provided under Section 97(2) of the CGST Act; and c. The question raised in the application is neither pending nor decided in any proceedings in the case of the Applicant under any provisions of the CGST Act. 2. Having complied with the pre-requisite conditions for filing the present Advance Ruling Application, we may now proceed to determine the classification of Caesarstone under the GST regime. The guiding principles determining the classification of a product under the GST regime can be broadly bifurcated as under: a. Classification under the Customs Ta
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is substantiated from the Technical Data Manual – Section 6 ("TDM") issued by the Applicant's vendor. A copy of the TDM issued by the vendor is attached and annexed as Exhibit F. 5. Quartz is a mineral composed of silicon and Oxygen atoms in a continuous framework of SiO4 Silicon-Oxygen tetrahedra. It is the second-most abundant mineral in Earth's continental crust behind feldspar, 6. Section V of the First Schedule to the Customs Tariff Act deals with various Mineral Products. Section V is further bifurcated into 3 Chapters viz., Chapter 25, Chapter 26 and Chapter 27. Chapter 25 covers "Salt; Sulphur-, earths and stone; plastering materials, lime and cement". The Customs Tariff provides that quartz of the following description can be classified under Chapter heading 2506 of the Customs Tariff: "Quartz (other than natural sands); quartzite, whether or not roughly trimmed or merely cur, by sawing or otherwise, into blocks or slabs of a rectangular (inclu
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k and mineral particles. Sand is characterized by the size which is finer than gravel and coarser than silt. However, Caesarstone is the processed form of quartz in the form of slabs and thus, the same would not be construed as a natural sand. 10. Although the GST' regime do not seek to classify goods in excess of 4-digit classification, for a better co-relation of classification under the Customs Tariff Act, we are hereby evaluating the 8-digit classification provided under the Customs Tariff Act. In this connection, it is pertinent to note that Quartz under heading 2506 can either be in powder form or in the form of lumps. 11. The term lump has not been defined under the Customs Tariff Act. Therefore, recourse needs to be made to the dictionary definition of the term lump. This has been defined in The Concise Oxford Dictionary [Pg. 8461] as "A compact mass, especially the one without a definite or regular shape". Applying the aforesaid definition, one may construe that
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n each heading. 13. In view of the above, it can be construed that only such products that are in crude form or have undergone inter alia the mechanical or physical processes are permitted to be classified under Chapter 25 of the Customs Tariff. Thus, while a product may not be supplied in crude form, if the same is subjected to the processes mentioned under Chapter Note 1 to Chapter 25, such product would also be construed to form part of Chapter 25 of the Customs Tariff Act Schedule. For this, it needs to be evaluated whether the processes carried on by the Applicant's vendor falls within the purview of the term "mechanical process" as specified in Chapter Note 1 to Chapter 25. 14. The term "mechanical process" has been defined in the Advanced Law Lexicon (5th Edition) as "A process involving the use of machine". While this definition explains the meaning of the term "mechanical process", we can also refer to the individual meanings of the
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nnotes a substantial measure of uniformity of treatment or system of treatment. According to the Oxford English Dictionary, it means a continuous and regular actions, taking place or carried on in definite manner' [Advanced Law Lexicon Edition)]. Copies of the relevant extract of the aforesaid definitions have been collectively attached and annexed as Exhibit G. 15. In view of the above, the term mechanical process can be understood to mean a series of operations with the use of machines. We shall co-relate this with the manufacturing processes carried on by the Applicant's vendor. The entire process of manufacturing Caesarstone is set out hereunder: a. Inspection of raw materials: The manufacturing process begins with a rigorous inspection of all incoming materials so as to ensure only high quality raw materials are used in the manufacture of Caesarstone. b. Feeding and mixing: The best quality raw materials are blended at a ratio of up to 93% natural quartz aggregates with pi
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Consequently, in terms of Chapter Note I to Chapter 25, the manufacturing operations conducted by the Applicant's vendor are within the ambit of permissible processes. 17. Besides this, the Applicant further submits that the HSN system of coding goods is based on the HSN developed by the World Customs Organization ("WCO"). The WCO, periodically releases an Explanatory Note to each of the Chapters / Products of the HSN. 18. We refer to the Explanatory Notes released by the WCO which are annexed to Chapter heading 2506 of the HSN Code. The relevant extract of the same is as under: Quartz is the naturally occurring crystal form of silica. It falls in this heading only if complying with both of the following two conditions : (a) It must be in the crude state or have not undergone any process beyond that allowed in Note 1 to this Chapter; for this purpose, heat treatment designed solely to facilitate crushing is regarded as a process permitted by Chapter Note 1. (b) It must no
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be construed that the impugned goods merit classification under tariff heading 2506 of the Customs Tari ff Act. 20. It may also be noted that the description of the product used by the vendor in its invoice is "Agglomerated Fabricated Quart: Slab". Thus, further substantiating classification under Chapter heading 2506 of the Customs Tariff Act. 21. In light of the aforesaid analysis, it is beyond doubt that Caesarstone merits classification under Chapter 2506 of the Customs Tariff Act. However, before concluding on the classification, it would be imperative to evaluate tariff heading 68 10 of the Customs Tariff Act. Classification of Caesarstone under heading 2506 of the Customs Tariff Act 22. The other heading that merits consideration for determining the classification of Caesarstone is 6810 of the Customs Tariff. Chapter heading 6810 covers "Articles of cement, of concrete or of artificial stone, whether or not reinforced'. In this connection, it is humbly submitt
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ete boulder has not be defined anywhere and thus, we would refer to the dictionary definitions. As per The Concise Oxford Dictionary, the word concrete refers to the building material made from a mixture of gravel, sand, cement and water. Further, the word boulder refers to a large rock. Thus, on a combined reading of both the aforementioned definitions, it can be construed that a concrete boulder would mean a large rock made from a mixture of gravel, sand, cement and water. In view of the above, the product can merit classification only under the residuary category of tariff entry 68109990. 24. Further, it would be worthwhile to refer to Chapter Note I to Chapter 68 which clearly provides that Chapter does not cover goods falling under Chapter 25. The relevant extract of the same is as follows: " 1. This Chapter does not' cover: a. Goods of Chapter 25; 25. Thus, if Caesarstone qualifies to be classified under Chapter heading 2506, it automatically gets excluded from the appli
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Without prejudice to the aforesaid argument, if one intends to apply Rule 3(a) of the General Rules for Interpretation, the said rule provides that a specific description should be prevailed over a generic description. In the instant case, the two headings that merit consideration is Quartz – In lumps (2506) and Other Artificial Stones (6810). In the instant case, the most specific description that relates to the nature of the impugned goods is under tariff entry' 2506, c. The Hon'ble Apex Court, in plethora of judgments held that the heading that provides a more specific description shall be preferred to the headings providing a more general description. i. In Indian Metals & Ferro Alloys Ltd., Cuttack vs. Collector of Central Excise, Bhubaneshwar, [1991 Supp (1) SCC 125 = 1990 (11) TMI 143 – SUPREME COURT OF INDIA], the Hon'ble Apex Court held that a residuary item can be referred to and such item can be applied only when goods are shown to be not falling under any o
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ical process" and accordingly, is within the scope of the processes permitted by Chapter Note 1 to Chapter 25 of the Customs Tariff; b. Chapter Note I to Chapter 68 specifically excludes goods falling under Chapter 25. Thus, if the goods are capable to be classified under Chapter 25, classification under Chapter 68 is automatically excluded; c. On analyzing the dominant-composition test, it appears that the product has approximately 90% quartz sand classifiable under Chapter 25 of the Customs Tariff Act. Consequently, applying the Rule 2 / Rule 3(b) of the General Rules for Interpretation, Caesarstone would also be classified under Chapter heading 2506 of the Customs Tariff; and d. The description used by the vendor is in line with the Explanatory Notes to Chapter 25 issued by the WCO. 29. However, the GST law in India is at its infancy and the Applicant intends to ensure minimum litigations under the GST regime, Therefore, the Applicant has approached this Hon'ble Advance Rul
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r referred to as "authority" for brevity) for determination of classification of the product '"Caesarstone" imported and sold in domestic market by the applicant. 3. The question before the authority is to decide whether the product "Caesarstone" imported by the applicant can be classified under HSN Code 2506 or 6810. 4. The applicant while submitting their case before the authority have submitted the manufacturing process by which the product "Caesarstone" is manufactured and it's composition. In para 3 of Exhibit B, it has been submitted by the applicant that the said product is manufactured by combining Quartz with high quality polyster resin and pigments which is then compacted under intense vibration, vacuum and pressure into dense and nonporous slabs. The submission is supported by the technical literature (pg 41) submitted by the applicant alongwith the application. 5. The HSN Code 2506 & 6810 describies the product as under :
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d, powdered, levigated, sifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading. 8. As per chapter note 1 of Chapter 25 only mineral products which are in crude state or have been mechanically or physically processed without changing the character of the mineral product can only be classified under Chapter 25. 9. As submitted by the claimant, the mineral product "quartz" is crushed, combined with pigments and resins and then under intense vacuum and pressure the product caesarstone is manufactured. The processes adopted for manufacturing the said product are not only mechanical Or physical but also chemical in nature by which the quartz which is a mineral product gets converted into a differently identifiable product, commercially known as Caesarstone". As per th
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uct, the articles made of quartz i.e. "Caesarstone" can be classified under Chapter 68. Chapter 6810 specifically mentions "Articles of Cement, of concrete or of artificial stone, whether or not reinforced" and includes Tiles, flagstones, bricks and similar articles. The product Caesarstone being similar article as Tiles, the same is correctly classifiable under Chapter 6810. 12. In view of the above submission it is prayed that the authority may give ruling that the product "Caesarstone" is appropriately classifiable under Chapter 6810 and not 2506. 13. As the above submission is interim in nature, we reserve our right to make further submission before the authority give it's ruling." 04. HEARING The case was taken up for preliminary hearing on dt. 31.01.2018. However, none attended on behalf of the applicant. Since one opportunity was decided to be given, the hearing was scheduled on dt.06.02.2018. On dt.06.02.2018 and on dt.15.02.2018 (the fina
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ed under intense vibration, vacuum, and pressure into dense, non-porous slabs. The slabs are gauged to precise thickness, and polished to an enduring shine or attractive honed finish, After passing inspection, the back of each Caesarstonc slab is imprinted with a zigzag trademark to simplify jobsite identification. Colors and Styles Caesarstone offers the widest spectrum of design options in the quartz surface industry. Our styles range from fine-grained salt-and-pepper patterns to coarse-grained color blends with a variegated visual texture. See our website or contact Caesarstone for color brochures and samples. Stocked Standards: 59 colors are available with a polished finish – 8 of them are also available in a honed (matte) finish. Three colors are available with a concrete finish. Finishes Caesarstone offers 4 distinctive surface finishes that Offer added character beyond the color offering. Caesarstone can be finished on two faces by special order requiring a minimum order quantit
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ed staff members to ensure a quality product that is unrivaled in the industry today. Caesarstone quartz surfaces meet exacting standards of excellence from the initial procurement of raw materials to the final quality control check. one's manufacturing process begins with a rigorous inspection of all incoming raw materials. Only the best quality raw materials are blended at a ratio of up to 93% natural quartz aggregates with pigments and polymer resins. Our strictly monitored automated process includes the following: Feeding & Mixing Raw materials are inspected, then into mixers and blended together. Molding The mixture is then poured into a mould and formed into slab sizes of 3050 x 1440mm Pressing The slab is then compacted by a special vacuum and vibration process at a pressure of 100 tons. Curing The slabs are moved to the curing kiln and heated to 900C for 45 minutes which gives Caesarstone its ultimate strength and solidity. Polishing Slabs are then gauged, calibrated an
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e Composition of Product Approximately 90% quartz, an abundant natural resource and by-product from mining other minerals. Low volatile organic compound (VOC) emissions, contributing to indoor-air quality. Less toxic than wood according to the UPITT standard in New York City building code. Continually developing recycled colors to add to our product line. Having seen as above, let us reproduce the schedule entry in respect of which claim is being laid and also, the entry which is claimed as being not applicable – S. No. Chapter/Heading/subheading/Tariff item Description of Goods GST Rate (CGST+MGST] 114. 2506 Quartz (other than natural sands) quartzite, whether or not roughly trimmed or merely cut by sawing or otherwise in to blocks or slabs of a rectangular (including square) shape 5% [2.5% + 2.5%] 181. 6810 Articles of cement of concrete or of artificial stone whether or not reinforces 18% [9% + 9%] It can be seen that the Heading 2506 covers "Quartz". However, the entry sa
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hat the impugned product surface containing quartz as its major raw material is covered by the natural quartz as falling in the Heading 2606. What we say finds confirmation from the Harmonized Commodity Description and Coding System Explanatory Notes (HSN) Notes of Chapter 25 – 1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading. The impugned product is not in the crude state. The addition of polyester / polymer resins and pigments alongwith quartz changes
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is put through processes which includes heating in a kiln. We see above that even roasting is not allowed by the Chapter Note. The General Notes of this Chapter further say that- "Minerals which have been otherwise processed (e.g., purified by re-crystallisation, obtained by mixing minerals falling in the same or different headings of this Chapter, made up into articles by shaping, carving, etc.) generally fall in later Chapters (for example, Chapter 28 or 68). As can be seen the above General notes throw light on the words "otherwise processed" It can be seen that these words do not cover activities such as mixing with other minerals, let alone polymers or pigments. Further, the words " otherwise processed" do not cover activities such as making up of articles by shaping, curving, etc. HSN Notes of the Heading 2506 make things clearer when they say – Quartz is the naturally occurring crystal form of silica. It falls in this heading only if complying with both
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excludes goods of the nature as the impugned product. None of the arguments and case laws in support of this Heading fail to make a point. Without any further discussion, we would conclude that the impugned product would not be covered by the Heading 2506. The applicant has argued that the impugned product would not be covered by the Heading 6810 as it falls in Heading 2506. Import documents submitted by the applicant reveals import from Caesarstone, Israel thus- Agglomerated Fabricated Quartz Slab of different grades is under Customs Tariff Heading (CTH) 68109990. Agglomerated Slabs (Artificial Slabs) of different grades under Customs Tariff Heading (CTH) 68109100. Let us look at the Customs Tariff Heading 6810 – 6810 ARTICLES OF CEMENT , OF CONCRETE OR OF ARTIFICIAL STONE , WHETHER OR NOT REINFORCED – Tiles , flagstones , bricks and similar articles : 681011 – Building blocks and bricks : 68101110 Cement bricks 68101190 Other 681019 – Other : 68101910 Cement tiles for mosaic 6810
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ineered stone See also: Engineered stone Engineered stones are the latest development of artificial stones, it was invented in the early 1980s and have since been continuously developed by the Italian company Breton S.P.A.'s late founder Marcello Toncelli Engineered stones are a mix of marble powder, resin, and pigment cast using vacuum oscillation to form blocks. Slabs are then produced by cutting, grinding, and polishing. Some factories have developed a special, low-viscosity, high-strength polyester resin to improve hardness, strength, and gloss and to reduce water absorption. There are two major varieties of engineered stones based on the main composition of its aggregates (stone powders), marbles and quartz. The process is more or less similar except in certain details, however the two product have different commercial applications. Engineered marbles are most commonly used as flooring for large commercial projects. Engineered quartz is widely used in the developed world for c
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stone, Silestone and Cambria blend crushed quartz with resins and pigments, pour the mixture into molds and apply pressure to compact the slabs, which are cured and polished into the final product. The quartz is then cut and finished like real stone. http://www.veritas.lt/en/artificial-stone/caesarstone/ The Caesarsrone (R) artificial stone surface is very comfortable in size and lightness. http:/townsvillestone.com. au/articles/naturaI-stone-vs-engineered-stone-kitchen-bathroom Engineered stone is a man-made product and was introduced into the market in the late 1980 s. The need for a manufactured stone arose due to a demand for more consistency in the look of the finished product, and a denser product. The main component in engineered stone is naturally forming quartz which is a highly strong mineral. Engineered stone has general consistency in colour and style due to each piece being made to exact recipes. It contains almost nil porosity which makes it resistant to scratches, chips
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duct was thus – The slabs are composed of 93% quartz and 7% resm binder. After 'he slabs are imported. they are sold only to U.S distributors who use then to produce various counter tops. vanities and fireplace surrounds. It was held that the agglomerated quartz sheets are classified under subheading 6810.99.00, HTSUS, which provides for other articles of artificial stone. We have also come across an article explaining the nuances of classification of stones as can be seen thus – http://stonebusiness.us/index.php?option=com_content&view=article&id=380:us-customs-classification-of-building-stone&catid=22&showall=1&limitstart=&itemid=234 Published 18 DECEMBER 2008 – By Jacob Bunin -National Import Specialist -U.S. Customs and Border Protection Generally, Chapter 25 of the Harmonized Tariff Schedule of the United States (HTS) covers crude stone and minerals, as well as stone and minerals worked in very simple physical ways (e.g., crushed, ground, powdered, wash
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rry shifts the classification of stone from Chapter 25 to Chapter 68. Heading 6802 covers monumental or building stone worked beyond the point allowed in Chapter 25 – i.e., stone processed beyond the stage of simple shaping into blocks, sheets or slabs by splitting, roughly cutting or squaring. Heading 6802 covers the forms of stone created by the mason or sculptor. This heading includes roughly sawn blanks and non-rectangular sheets. The 6802 forms also encompass any stone (including blocks, slabs or sheets) that has been polished, dressed, furrowed, planed, ground, chamfered, molded, carved, ornamented, beveled, edge worked, etc. In addition to worked monumental or building stone, heading 6802 covers articles of monumental and building stone. A significant exception to this rule involves articles of precious or semiprecious stone classifiable in Chapter 71 Heading 6802 (Worked Natural Stone) vs. Heading 6810 (Artificial Stone) Worked monumental/building stone is classifiable in headi
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