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A Melbourne shop has been caught selling a terrorist costume to outraged customers.

The ‘Terrorist man’ costume sold for $34.99 at the JC Plaza in Clarinda, shows a man holding a gun with a long black beard, hat and jacket.

One angry customer said she left the shop in tears when she saw the outfit and told the Herald Sun she was horrified.

‘I was shocked and terrified and could not believe my eyes,’ she told the publication.

‘I wanted to shout out, ‘this is so wrong, this is shameful’ and it took me a few minutes to calm down and take a photo.’

Store owner Jin Cai apologised and told Daily Mail Australia the costumes were ‘old stock’ leftover from the previous owners.

Store owner Jin Cai told Daily Mail Australia the costumes were 'old stock' from when she took over the shop 

Store owner Jin Cai told Daily Mail Australia the costumes were ‘old stock’ from when she took over the shop

‘I’m so sorry about this,’ she said.

‘If the customer wants a refund, I can provide her one.’

Anti-Defamation Commission Chair Dr Dvir Abramovich said the costume was ‘bad taste’ and he called on the shop owners to immediately withdraw ‘these disgusting outfits’ from sale.

‘There is nothing funny or cool about dressing up as a murderer responsible for horrific bloodshed and for tragic suffering that have affected so many people around the world,’ he told Daily Mail Australia.

‘Terrorism should never be glorified or celebrated in any way. I have no doubt that this insensitive costume will get the thumbs down from most Australians who will find this sickening and who will condemn it.’

The costume has previously appeared in shops in Brisbane and Melbourne.