Acting on a tip-off, the police raided the house of Sanjay Yadav late last night and seized the fake currency in denomination of Rs 1,000 before arresting three smugglers. The three were identified as Manoj Kumar Yadav, Nar Machheshwar Giri and Duregesh Yadav, SP Saurabh Kumar Sah said.
Another suspect Sanjay Yadav managed to give the police a slip, he said.
A large quantity of country-made liquor, raw materials and rapper used for packaging liquor were also found in Yadav's house, the SP said.