Customs officers arrested two men after seizing 400,000 illicit cigarettes from a van and a storehouse in Tin Shui Wai yesterday.
The haul was valued at $1.1 million with a duty potential of about $800,000.
The van was used to deliver the cigarettes ordered by phone.
The Customs & Excise Department said telephone ordering of illicit cigarettes has become common. It seized 3.3 million illicit cigarettes in the first quarter of this year, worth $8.5 million.