AN ILLEGAL fuel factory has been uncovered in Oswaldtwistle as part of a crackdown across the North West by Customs and Excise.
Teams swooped on the industrial unit and seized around 88,000 litres of laundered diesel.
A road fuel tanker and tractor unit were also taken away, along with pumping and storage equipment.
Customs officers, accompanied by teams from Accrington Police, discovered that the plant was capable of churning out £130,000-worth of illegally-doctored diesel every week.
Acid was apparently added to the tax-free red diesel to remove the dye, before being mixed with kerosene to make it go further. Red diesel is normally used for agricultural vehicles and is not allowed in road vehicles.
Paul Gerrard, Customs' national head of UK oils strategy, said: "The success of this operation shows that we have the expertise and determination to crack down on even the most sophisticated kinds of oil fraud. This operation could have cost the public purse millions of pounds each year."
"But more than that, the acid-contaminated fuel it produced would wreck the engines of the cars that used it."
"The acid sludge from the plant would also pollute the countryside wherever it was dumped."
Officers said that the site in Oswaldtwistle, which has not been identified, could produce around 165,000 litres of diesel a week - the equivalent of £80,000 in tax losses.
Illicit diesel cost the Government £650M, or five per cent of the total fuel market in England, Scotland and Wales, during 2002. But new measures have been introduced to crack down on diesel fraud, including stronger rules on sellers of red diesel and more investigating teams.
Two men from the Rochdale area were arrested in connection with the operation and were released on police bail until 19 May.
The raid was linked to other operations in the Cheetham Hill area of Manchester, during which documents were seized from commercial premises, and at a house in Rochdale, when £11,150 in cash was found.