Alcohol and tobacco seized by Customs officers may have found its way onto the black market, according to an official report.

A lack of proper controls meant that some contraband sent for destruction could have been illegally sold-on instead, the National Audit Office (NAO) said.

An internal investigation by Customs found some evidence of goods re-entering the market in this way, the NAO said.

Edward Leigh, chairman of the Parliamentary Public Accounts Committee, said "I am appalled at this state of affairs which provided opportunities for fraud at every stage."

The findings follow a sharp rise in the quantities of goods seized from people returning from the continent and will anger many of the travellers targeted.

Record keeping

According to the NAO report, Customs officers seized 1.6 billion cigarettes and 5.4 million litres of beer, wine and spirits in 2001/02.

We have reviewed and if necessary re-let contracts with those who hold our goods for us Customs and Excise

The sheer quantity of the goods meant that private companies were employed to store and destroy them.

But poor record keeping by Customs meant that the NAO could not establish the scale of any fraud.

"They did not even know how much was in store or what it's value was," an NAO spokesman told BBC News Online.

"Stuff which was supposed to have been disposed of was just hanging around."

Overcharging

It said there were doubts that some contraband ever reached a warehouse

And it added: "Customs' staff could potentially amend records of volumes and values of seized goods, or even delete entries inappropriately."

The NAO criticised Customs for failing to ensure seized beer and tobacco was destroyed immediately and wine, spirits and vehicles within 45 days.

When two contractors' warehouses were checked 44% of goods had been there for over a year - allowing one to overcharge for storage by �112,000.

'Severe blow'

Mr Leigh: "Public confidence in Customs will have been dealt a severe blow by the finding that seized illicit goods, including tobacco and alcohol, were not stored or disposed of securely and were vulnerable to fraud and theft."

People returning from Europe have been targeted

He criticised Customs for being "slow to sort this mess out".

The Public Accounts Committee will want proof that there are now strategies in place to make sure the system is no longer open to such abuse, Mr Leigh added.

Customs and Excise said there was no suggestion that any of its officers were corrupt.

CCTV installed

It said it had introduced tough measures to deal with the problems identified by the report, which dealt with the period up to March of this year.

A spokeswoman said: "We have reviewed and, if necessary, re-let contracts with those who hold our goods for us."

She said the number of warehouses used had been reduced to three, CCTV cameras installed and management of the sites centralised.

The shredding of seized cigarettes and tobacco by contractors was now overseen by Customs officers, the spokeswoman added.