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Shipping method State restriction

I have created Shipping items and restricted the same by Country and State. For instance, one of the shipping methods created have Alaska and Hawaii as the states.

The Shipping item rate is set as Shipping table based on order total.

However, when creating Sales orders this restriction was not applied. A Sales order with Shipping Address in New York was created with this restricted Shipping item as method.

Is there any step missed out during setup, or is this related to some enhancements?

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