When goods such as tobacco and cigarettes on which duty is payable are purchased in one Member State and subsequently transported to another Member State by a trader acting for commission, who has previously solicited customers in the second State and has arranged for the transport and importation of the goods, excise duty is payable in the State of importation.

EMU Tobacco, a Luxembourg retailer of tobacco products, and The Man in Black Limited are subsidiaries of the Enlightened Tobacco Company. The companies have set up and operate a scheme which enables residents of the United Kingdom, ?without leaving the comfort of their own armchairs', to obtain tobacco products purchased from EMU in Luxembourg.

The purpose of the scheme is to avoid paying United Kingdom excise duty, which is considerably higher than the duty payable in Luxembourg. Customers, using The Man in Black as an agent, place orders for cigarettes, the maximum per order being 800 cigarettes. The agent undertakes to transport the goods from Luxembourg to the United Kingdom and to pay the retailer (EMU Tobacco) and the carrier the sums due to them, on which it takes a commission.

In the course of 1995, the Commissioners of Customs and Excise detained certain quantities of tobacco products when they were imported into Dover, as they are authorised to do by United Kingdom legislation when excise duty is payable.

In judicial review proceedings against the United Kingdom customs authorities, the two companies claimed that, where goods had been imported for the personal use of private individuals who had paid excise duty on them in the Grand Duchy of Luxembourg, they were exempt from duty in the United Kingdom and thus their detention was illegal.

The Court of Appeal of England and Wales requested the Court of Justice to give a preliminary ruling on a number of questions concerning the interpretation of the Community directive on the general arrangements for products subject to excise duty. In the course of the proceedings before the Court of Justice eleven Member States submitted observations on the questions.

In replying to those questions, the Court emphasised, first, the distinction drawn in the directive between, on the one hand, goods held for commercial purposes and, on the other, goods held for personal use.

Under the directive, for it to be established that goods on which excise duty is chargeable are held for strictly personal purposes, the goods must have been acquired by private individuals for their own use and transported by them (Article 8).

The companies maintained that those conditions were satisfied where the goods had been purchased through an agent who also arranged for their transport.

The Court found that where, in the text of the directive, the Community legislature had in mind the involvement of an agent, it made this clear by express provision. On the matter in issue none of the language versions expressly contemplated the intervention of an agent.

The Court further found that the scheme set up by the retailer and the agent fell under Article 10, governing mail-order sales, and Article 7 of the directive; under those provisions excise duty is payable in the State of destination.

Lastly, in response to the contention that excise duty would then be charged twice over, the Court pointed out that the directive provides expressly that, in such a case, excise duty paid in the Member State where the goods were purchased is to be reimbursed.

This press release is an unofficial document for media use which does not bind the Court of Justice. For the full text of the judgment please consult our Internet site http://curia.eu.int at approximately 15.00 hrs today.

For further information, please contact Mr T. Kennedy tel: (00352) 4303-3205