A US judge ordered the American shipping giant UPS to pay $247 million to New York state and city governments, for shipments of cigarettes that illegally evaded taxes.

Federal district court judge Katherine Forrest found UPS ‘liable in each claim’ and therefore the city and state ‘are entitled to compensatory damages and penalties,’ according to court documents.

Noting that UPS repeatedly denied any wrongdoing, the judge ordered the company to pay $166 million to New York state and $81 million to the city of New York. The two plaintiffs claimed approximately $872 million in damages.

UPS said it was ‘extremely disappointed in the court's ruling and imposed penalties and we will vigorously appeal the decision.’

The company said the penalties were ‘excessive and far out of the bounds of constitutional limits, particularly given that the shipments at issue generated around $1 million in revenue,’ UPS said in a statement.

New York State Attorney General Eric Schneiderman filed the lawsuit against UPS in February 2015, accusing the company of delivering 683,000 cases of undeclared cigarettes to private individuals and resellers without a license between 2010 and 2014.

That represented a total loss of $34.4 million in taxes not paid to the city and the state of New York.

But the company said the authorities ‘sought to force UPS to serve in a quasi-law enforcement role which involved monitoring, inspecting and reporting package contents, which is not appropriate for a common carrier.’

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