Its head officer, A. Runji Abdul Hamid, said the confiscation was made after a raid on a small house behind a residence in Jalan Keningau-Tenom about 3pm on Friday.
He said five officers from the ministry here raided the house following information from the public and found subsidised diesel.
Initial investigations revealed that the perpetrators' modus operandi was to channel diesel from gas stations through the modified lorry tank and then transferred to the containers before being sold to factories and log camps, said A. Runji.
He believed that the illegal activity had been carried out for six months.
The case is being investigated under the Supply Act 1961.