Brussels has accused British Customs of disproportionate tactics in tackling people bringing excessive amounts of alcohol and tobacco into the UK.
Stocking up on alcohol in France is a popular British custom
The UK Government has been told it has two months to satisfy the commission its approach is not in breach of EU or face legal action.
They say people can bring in any amount of booze and tobacco for personal use.
UK Customs have been seizing alcohol and tobacco and confiscating vehicles if they think goods will be sold.
The Treasury says it is loosing huge amounts of tax revenue as people bring in cigarettes and alcohol from across the Channel, where duty tends to be lower.
The commission has already formally told the government to justify the tactics.
Now it has gone further and warned that Britain could be taken to the European Court of Justice for breaching EU rules on the free movement of good and cross-border shopping.
A statement said: "The commission has decided to send the UK a formal request to amend its policies relating to excise duties and cross-border shopping for
tobacco and alcohol.
"The commission's request concerns the policy of seizing goods and sometimes
cars even for minor offences.
"The commission considers that such seizures are
disproportionate to the gravity of the offence in some situations and represent an obstacle to the free movement of goods subject to excise duties in the
"If there is no satisfactory response to the reasoned
opinion within two months the commission may refer the matter to the Court of Justice."
European Commissioner Frits Bolkestein, who overseas taxation and customs, has said: "Cross-border shopping is a
fundamental right under EU law and should not be regarded as a form of tax evasion - even if it does give rise to revenue losses for the UK Exchequer."
A spokesman for the Treasury said the UK Government would not be "lectured" by someone "pretending to be a friend of the British tourist".
"We fully support British shoppers' rights to bring back as much tobacco and alcohol as they like from the Continent for their own consumption," he said.
"Our sanctions regime is designed to protect those rights while deterring people from breaking
the law - and it is entirely proportionate to a smuggling problem that funds organised crime and costs the British taxpayer £4bn a year."
The spokesman added that the commission "wheels out this same spin twice a year - pretending to
be the friend of the British tourist - once before the summer holidays and once
before the Christmas booze cruises.
"It is a cynical worn-out ploy to obtain a good day's coverage in the British press, and everyone should see through it for what it is."