The European Commission dropped a lawsuit against Britain for violating EU rules by seizing and taxing cheaper alcohol and tobacco products bought by travellers in other EU countries.

In Brussels, EU Taxation Commissioner Laszlo Kovacs said the European Union executive and Britain reached an out-of-court deal, by which British customs officials would follow EU rules. “I am pleased that we have been able to find a pragmatic outcome in this case,” Kovacs said in a statement. EU citizens can import goods for personal consumption without paying taxes again upon return to their country of residence within the EU. The commission claimed British customs officers seized goods and even cars from shoppers returning from cruises to France and Belgium, where many go to purchase cheaper cigarettes, beer and wine. Under the new policies, British authorities will no longer systematically seize the goods and cars from individuals that are for personal use, the commission said. It said British officials would impose fines and a warning to first-time offenders, but they could seize goods if offenders continued to import goods for resale. The EU executive filed a case at the EU high court in 2004. British authorities had said their customs policies are needed keep a lid on smugglers who import goods from Europe for resale. Britain said it was losing billions of pounds a year in excise duties due to smuggling. The European Commission opened an initial investigation into British procedures in 2001. The right to buy duty-paid products in one EU country and import it into another for personal use was introduced in 1992 as part of making the EU a single economic market.