November 14, 2006	Tuesday	Shawwal 21, 1427

LONDON, Nov 13: Treasury’s income from duties on goods coming in from Europe is slated to come under considerable pressure soon as the European court of justice is said to be all but set to hand down a ruling favouring duty-free delivery of goods from EU countries to British homes.

The Guardian on Monday reported that an adviser to the court has backed the change, which could mean a big drop in tax income for the Treasury, which wants the court to reject the advice. The Treasury argues that the way it interprets duty laws is correct.

Francis Jacob, the court's advocate general, gave his suggestions to the court last December and the court will give its verdict on November 23.

If the change goes ahead, shoppers will be able to order alcohol and cigarettes from countries in mainland Europe, where there are often lower alcohol and tobacco duty rates.

The leading British supermarkets have tried to cater for the British customer abroad -- opening shops aimed specifically at the "booze cruise" market. But the Wine and Spirits Trade Association said UK-based retailers might struggle to compete on wine sales against countries such as France, where duty is minimal.

The case comes down to where excise duty on alcohol and cigarettes should be charged. In general, it is chargeable in the member country of final destination. But a provision allows for excise duty on products "acquired by private individuals for their own use and transported by them" to be charged in the country of purchase.The case was brought by a group of Dutch wine enthusiasts that wanted to be able to buy wine from France for private consumption but was prevented from doing so unless one of them travelled to France to bring the delivery across the Dutch border.

Last night a Treasury spokesman said: "It is very important to remember that the advocate general's opinion is just that -- an opinion." But the judges follow the advocate general's opinion in about 80 per cent of cases before the court.

The British Retail Consortium has said such a move could hit British business hard unless excise duty rates are harmonised across the EU.

Some estimates suggest that booze cruises cost the Treasury more than £3bn a year in lost domestic tax revenue, with thousands of Britons taking advantage of a system that allows them to stock up and sail off with cheap alcohol and cigarettes.

The government makes about £15bn a year from excise on alcohol and cigarettes.

The EU judgment will come six months after the European Commission's decision to end legal proceedings against Britain for cracking down on shoppers bringing in excessive quantities of alcohol and tobacco.

The Treasury crackdown was triggered by fears that shoppers were bringing in much more cheap drink and cigarettes than was justified by private consumption, selling it on and worsening revenue losses.