Three persons, Ramesh Chaudhary, Amarendra Kumar and Mahendra Vishwakarma, have been arrested in this connection.
Arwal SP Shafiul Haq said the operation was conducted on the basis of a tip-off and a poultry farm at the village was raided by a specially constituted police team for the purpose.
"The liquor was kept in 26 plastic drums and buried beneath the ground at the poultry farm. It seems the arrested persons manufactured it and supplied it in the market," said Haq.
Meanwhile, hunt is on to seize liquor distilling equipment and arrest other persons involved in the illicit trade.