£6 a litre whisky at offshore off-licence

Customs and Excise officials have launched an investigation into Philip Berriman's business venture off the North-East coast and warned that he could be committing offences.

But the marine engineer from Teesside - once arrested for trying to import £11m of cannabis into the country - last night insisted he was not breaking the law.

Mr Berriman, who was cleared of the smuggling charges nine years ago after arguing he was forced into it by a dangerous gang, said: "I am doing a legitimate business."

The 46-year-old is selling cut-price alcohol and cigarettes from his 72ft yacht, Rich Harvest, which is anchored almost 13 miles off the coast of Hartlepool.

Mr Berriman said that because he is more than 12 miles offshore, he is in international trade waters and his scheme is legal.

He said: "All we are doing is bringing the goods closer to the people who want them. I have nothing to hide."

On each run abroad - where duty rates are much lower - Mr Berriman, from Stockton, and his business partner, Trevor Lyons, 53, from Stoke-on-Trent, bring back up to 5,000 boxes of 200 cigarettes and a thousand litres of spirits. These are then sold from the £1.8m yacht until the supply runs out, when they sail abroad again to stock up.

Customers, who have to make their own way out to the yacht, are allowed to buy a maximum of 30 boxes of cigarettes and 30 litres of alcohol each.

The cigarettes range from £15 to £23 for 200, and the spirits - brandy, vodka, gin and whisky - start at £6 a litre. Purchases must be for personal consumption as it is illegal to re-sell the goods onshore.

Mr Lyons, a lecturer in marine law, said: "It is a legitimate run, taking advantage of a loophole which for the time being will remain open."

Mr Berriman said: "Things are going steadily and we hope once the business is up and running we could be making as much as £10,000 a week.

"My business partner has looked into the legal situation and we are doing nothing at all illegal. If I thought we were, I would stop straight away."

A Customs spokesman claimed that bargain-hunters would be eligible to pay duty on their alcohol and cigarettes when they landed ashore if the goods had been bought tax-free abroad. They could even be forced to hand over their boats.

He said: "We are looking into this matter to see if any rules have been broken. Although we don't have specific details, there are a number of offences that may be being committed."

But Mr Berriman said: "Duty has already been paid within the EU on the consignment we are carrying, so that negates their argument.

"If the Customs have got the legislation they should quote it.

"They are clouding the issue and making people frightened to come out.

"The law is the law in this country and people should be able to take advantage of it without being threatened by legislation that doesn't exist."

The longitude and latitude co-ordinates of the yacht are posted at Hartlepool marina, and on fly-posters being handed out by Mr Berriman