Step 1: Place peppers and shallots in a bowl.
Step 2: In a saucepan combine next 7 ingredients (vinegar -salt) and bring to a boil over medium heat; stirring to dissolved sugar and salt. Remove from heat and pour over the peppers and shallots; cover bowl and let stand 5 minutes; uncover and let cool to room temperature. Transfer to a quart jar; cover and chill for 4 hours or up to 10 days.
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