Yan Fei Xue, 38, and Zheng Hui Wang, 28, used the one-bedroomed flat in Lovell Park Grange, Little London, to prepare and package commercial quantities of counterfeit hand-rolling tobacco, before passing it off to the UK public as the genuine article.
Leeds Crown Court heard HM Revenue and Customs (HMRC) officers searched the flat and discovered more than 100 kilos of loose tobacco – some of which contained mould – and almost 15,000 cigarettes.
Officers also found 42,000 empty counterfeit tobacco pouches, packaging equipment and large quantities of vinegar – which the pair used to moisten their product.
Investigations started when Xue was stopped at Leeds Bradford Airport on May 9 2014.
Inside her luggage, Border Force officers discovered 40kg of illicit hand-rolling tobacco and 800 cigarettes.
After being arrested by HMRC, Xue said she had been paid £1,000 by a ‘friend’ in China to bring the tobacco back to the UK.
HMRC searched her Lovell Park Grange address and found the makeshift tobacco plant. The contraband – some of which was packaged as ‘tea’ – and manufacturing equipment were seized.
Further checks revealed a Zheng Hui Wang was the registered tenant.
When HMRC officers returned to the flat on July 7 2014, they discovered the tobacco plant was once again in full swing.
And amongst paperwork, officers found evidence of a foreign bank account belonging to Wang, with a balance of £7,000. Wang was arrested, Xue for a second time.
The pair were charged with being knowingly concerned in the fraudulent evasion of excise duty and pleaded guilty at the start of their trial in July.
Both were handed 15 month prison sentences, suspended for two years.
Wang, of Greenford Road, London, was also handed a three-month curfew, and Xue, of Lovell Park Grange, Little London, Leeds, was given a community order.
The total excise duty evaded relating to the three tobacco seizures totalled £30,626.08.
When filled, the 42,000 empty hand rolling tobacco pouches would have resulted in a duty loss of £300,464.89.
Jo Tyler, assistant director, criminal investigation, HMRC, said: “This was a well-oiled operation – Xue and Wang went to great lengths to earn a dishonest living.
“The public was led to believe this tobacco was from a genuine, regulated manufacturer. But the pair knew that simply wasn’t true and showed a total disregard for others by adding their own ingredients.
“Tobacco fraud is a highly organised global crime, which costs the UK around £2.1 billion a year in lost taxes. It is theft from the taxpayer, and undermines legitimate traders.”