A MAGISTRATE yesterday threw out three charges alleging businessman Chong Tsoi-jun was involved in an $8.5 billion cigarette smuggling racket. But Chong, 49, was immediately re-arrested by the ICAC and charged with a $60 million tax fraud. Magistrate William Eccleton ruled there was insufficient evidence for the smuggling case to continue and ordered Chong's release. However, prosecutor Kevin Zervos said the Crown would consider pursuing the allegations by way of a voluntary bill. And amid heated scenes in court, he claimed Mr Eccleton had 'got it wrong', to which defence lawyer Adrian Huggins QC countered the magistrate had made his decision after 'scrupulous inquiry of all facts'. Chong was re-arrested while he was still in the cells yesterday morning and appeared before magistrate Yung Yiu-wing at Eastern Court four hours later. Mr Yung granted Chong bail of $3 million in cash and $2 million in sureties. But he is to remain in custody pending a Crown appeal against the decision. Mr Zervos said the new allegations represented the biggest tax-fraud case in Hong Kong history. Chong was previously charged with one count of conspiracy to offer advantages to tobacco company staff over eight years to ensure the sale and supply of cigarettes to his companies, one count of conspiracy to export unmanifested cigarettes, and one of conspiracy to defraud the Government. He had been in custody since April, after the murder of prime witness Tommy Chui To-yan in Singapore. Chong, director of cigarette trading company Giant Island, is now alleged to have conspired with Chui and others to defraud the Government by falsely declaring the firm's taxable profits from 1991 to 1994. He also faces an alternative charge of failing to disclose the transactions of another company, High Get Enterprise, to the Inland Revenue Department between 1987 and 1994. No plea was entered and the case was adjourned until December 4.