(26 May 1995) English/Nat
A scheme to import duty-free cigarettes from the Continent was declared illegal by a British High Court today (Friday).
The test case was brought by "The Enlightened Tobacco Company" which sells mail-order cigarettes to smokers in Britain.
The company - which buys its cigarettes cheaply in Luxembourg - challenged Customs and Excise on the legality of the scheme which was costing the British Government millions in lost revenue.
This may be the last duty-free cigarettes Britain's smokers can enjoy without having to leave the house to buy them.
For over two years it was possible to buy top-brand cigarettes around 40% below their UK retail price with the "Tobacco Direct" scheme.
The scheme exploited a loophole in European Community law which enabled a British company, "Enlightened Tobacco Company" ("ETC") to purchase cigarettes cheaply in Luxembourg and - through an agent - mail them directly to customers without having to paying UK excise duty.
Today's ruling by a High Court Judge looks set to put ETC out of business.
Mr. Justice Popplewell said there was a clear distinction between community travellers allowed under single market regulations to buy and bring back cheap tobacco from the Continent and what was in effect a commercial exercise run by ETC.
The result of this test case is a crushing defeat for ETC. The company believes the decision goes against the spirit of the European Union.
SOUNDBITE:
"It's a very important decision for Europe as well - at the end of the day we were promised by our politicians, we were asked indeed, to prepare for Europe, well we did at our company-we prepared for Europe when we started offering UK customers their products at European prices. It turns out that preparing for Europe actually means burying your head in the sand".
SUPER CAPTION: BJ Cunningham - Vice President, Enlightened Tobacco Company
At Enlightened Tobacco Company's warehouse in Luxembourg cigarettes were being packed ready for delivery to customers in Britain. The company gets over three thousand orders every month. Cigarettes cost two pounds seventy-five per packet in Britain's shops - they are subject to the highest level of excise duty in Europe. The government collects almost three quarters of the retail price on every packet sold.
Representatives of Britain's tobacco industry were also in the High Court today. One of the four main tobacco companies in the UK (Imperial Tobacco Company) had joined forces with the government in their legal battle against ETC. The Tobacco Alliance, the cigarette-sellers trade group, feared that victory for ETC could lead to corner shops and newsagents across Britain being forced to close.
The Industry has renewed its calls for the government to bring duty levels more in line with Europe.
SOUNDBITE:
"Government's got a 9 billion pound annual take from cigarettes and tobacco, that's 25 million pounds a day, 17 thousand pounds a minute. Now something's got to be done about that because we're so far ahead of the rest of the European Union in terms of our tobacco tax, that it's impossible to compete-and no wonder people like ETC and other entrepreneurs are going for whatever loophole they can find, we have no quarrel with that. Our quarrel, as I say, is with the quite extraordinary high duty rates which we have to accept in this country because the Government has seen fit to be as greedy as it is".
SUPER CAPTION:Clive Turner - Executive Director Tobacco Manufacturers Association
SOUNDBITE:
"It's back to Calais for me I'm afraid!"
SUPER CAPTION:Angie - Smoker
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