Two Melbourne men have been jailed over a “sophisticated” black market tobacco manufacturing operation that cost the country millions of dollars in lost excise tax.

The unlicensed Tarneit operation was under surveillance for months before Australian Taxation Office investigators raided it in May 2014, finding more than 8000kg tobacco in different stages of production.

Tobacco was grown, harvested, cut, dried, boxed and distributed at the site, west of Melbourne, which included two farm properties, a factory and a garage.

Houssein Saoud, 37, and Carlos Fernandez, 40, were charged with dishonestly causing loss to the Commonwealth and convicted by a County Court jury.

Both men were jailed for three years on Thursday for their role in what Judge Felicity Hampel described as a “large-scale” venture that took a lot of time and effort to run.

“This was a sophisticated, large-scale enterprise, covering the whole process of manufacture of tobacco from bare acre to finished product,” she said.

“It required the investment of considerable sums of time, money and manpower.”

Labourers were transported around the operation on a minibus and there were drying kilns, cutting machines, irrigation and harvesting equipment at the site.

At trial, the pair denied being involved in the illegal operation and Saoud claimed he only grew broccoli as a market farmer.

But the jury found them guilty of causing a loss to the Commonwealth totalling more than $3.5 million in foregone tobacco excise duty.

Saoud and Fernandez are both married with young children and both lived in Lebanon when they were younger.

Sauod is a mechanical engineer and while Fernandez isn’t as qualified, he is considered the “mascot” of a kickboxing gym where he trained.

Judge Hampel said the pair’s intelligence and background seemed at odds with their crimes, adding that a high tobacco tax is no excuse.

Brand-name cigarettes now sell for more than $1.25 each due to some of the world’s stiffest taxes, opening market opportunities for those prepared to break the law.

“The offending cannot be downplayed by disparaging tobacco excise as a revenue raiser, as if that somehow justifies avoiding the excise,” Judge Hampel said.

“The return (on the tobacco operation) would be maximised by the avoidance of excise, increasing the potential profit.”

Saoud and Fernandez were ordered to serve a minimum term of two years and three months before being released on a federal good behaviour order.

-AAP