Eight mainlanders were arrested after nearly 4,000 bottles of brandy worth $1.6 million were seized on their way to the mainland early yesterday.
The arrests took place on four motorised sampans off East Ninepin Island at around 7.15am, just minutes from the border.
Police anti-smuggling taskforce Chief Inspector John Cameron believed the French brandy was genuine but had not had duty paid on it.
Each bottle can fetch a market price of $420, including $85 tax.
'We believe that they loaded the brandy from a mother vessel which could not be located,' he said.
The bottles of brandy were packed into 330 cases which carried marks of 'HKDNP' - Hong Kong Duty Not Paid. Police handed over the case to Customs officers for further investigation.