The distillery, on the outskirts of Cardiff, is thought to have produced in excess of 5,000 bottles of vodka labelled as 1806 Prince Nicolas Alexandrovitch Christoff, 37.5 per cent abv.
A further 20,000 empty bottles and labels were found at the illegal plant, indicating the size of the operation.
Drinks retailers are being told not to buy the vodka if offered it but instead to contact police.
A spokeswoman for customs in South Wales said: "When our officers visited they found a large-scale alcohol bottling plant.
"This is the biggest seizure of this kind in South Wales HMRC has ever had. In relation to the quantities, this is the most professional operation we have seen." Three Polish men found at the site were arrested but later released without charge. The police investigation is continuing.
Food Standards Agency Wales has issued a warning to shoppers who may have bought the 1806 Christoff brand vodka. The FSA said: "It is possible for counterfeit vodka to contain considerably more methanol than would be expected for an authentic vodka, so this brand might be dangerous.
"At this time there 's no data to confirm this. As a precaution, the Agency is advising anyone who has a bottle of this vodka not to drink it."
It has advised anyone who has bought the vodka to contact Trading Standards. Samples of the product have been sent to the public analyst for testing and results are awaited.