“We also believe that crime syndicates anticipated the possibility of an increase in tobacco tax, so they stockpiled a larger quantity of illicit cigarettes ahead of time to supply the market after the tax hike,” he said.

The untaxed cigarettes were discovered over the second phase of a citywide operation code-named “Tempest”, which involved the arrest of 776 people between February 29 and March 14.

Customs detained 538 people and seized HK$62 million worth of illegal tobacco products in 10 days during the first round of the operation between February 19 and 28.

Financial Secretary Paul Chan Mo-po announced an immediate 80 HK cents a stick increase in tobacco tax as part of the budget on February 28.

The increase in tobacco tax raised the average cost of a pack of 20 cigarettes by HK$16 to more than HK$90. A pack costs HK$19 to HK$38 on the black market.

Lau said city syndicates behind the illegal cigarette business had turned to places “such as subdivided flats in urban areas” to store contraband tobacco products “in an attempt to evade detection and reduce financial losses”.

Customs officers discovered HK$2.25 million worth of untaxed cigarettes in two shops at a Tsuen Wan shopping centre on March 7 – the first time that stores in that environment were found to have been used for storage.

Lau emphasised that customs would continue to monitor the tactics used by smugglers, as well as carry out enforcement action to disrupt the trade in black market cigarettes, and issued a stark warning to criminals.

“The efforts to combat illegal cigarette activities will only increase and never decrease,” he said.

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The largest seizure in the operation was made on March 11 when customs officers discovered HK$76 million worth of untaxed cigarettes in a village hut in Yuen Long.

It was one of the six storage sites customs officers discovered in the second round of the operation.

They found HK$26 million worth of contraband cigarettes hidden in four containers in Lok Ma Chau on March 6.

Customs also cracked down on seaborne smuggling, with officials seizing HK$43 million worth of illicit cigarettes in a shipment of frozen food from Taiwan on February 29.

Among the 776 people arrested between February 29 and March 14, 730 were detained at air, land and sea entry points. They were found to be in possession of tobacco products over the duty-free allowance.

Passengers aged 18 or above are allowed to bring 19 cigarettes, one cigar or 25 grams of manufactured tobacco into Hong Kong tax-free for personal use.

The Customs and Excise Department said 691 people caught at checkpoints were fined HK$2,000 and ordered to pay five times the duty payable on the contraband cigarettes because their offences were compoundable under the Dutiable Commodities Ordinance. The penalties added up to about HK$3.5 million.

Hong Kong anti-tobacco smuggling Operation Tempest gets off to a storming start

Superintendent Au Yeung Man-ching of customs’ rail and ferry command also warned that “the more you bring, the heavier the penalty”.

Another 39 people were charged under the legislation. Possession of contraband cigarettes in Hong Kong is punishable by up to two years in prison and an HK$1 million fine.

The crackdown also covered street peddling of contraband cigarettes, with 49 buyers and 21 sellers of illegal tobacco products brought to book in a variety of districts, including Sham Shui Po, Kwun Tong, Tsuen Wan and Tuen Mun.

Lau said customs officials had always made every effort to combat the trade in illegal cigarettes at all levels.

He added that “whether it is the purchase of a single stick or a whole pack, we will definitely enforce the law rigorously”.

Customs officers confiscated 652 million black market cigarettes worth HK$2.25 billion last year, the highest annual cash value for more than 20 years.