The European Commission has called off its legal battle against UK limits on the importation of cheap booze.
The Treasury has been losing revenue
Consumers complained over tough action from Customs and Excise which saw people's cars being confiscated.
The UK Treasury was losing revenue from large quantities of alcohol and tobacco being brought into Britain.
The European Commission said the right to shop in other countries was fundamental and should not be seen as a form of tax evasion.
Under EU rules, customs staff can confiscate the purchases of "booze-cruise" shoppers if they the amounts seemed more than could be justified for personal use.
The European Commission launched legal action on the grounds the British Government was being too tough on consumers.
It has now called that off because it is convinced changes in the way customs handled cross-channel shoppers had met its requirements.
"The Commission has been examining the UK's policy concerning cross-border shopping for tobacco and alcohol very carefully over a long period of time," said Tax and Customs Commissioner Laszlo Kovacs.
"Member states have a right and duty to combat fraud and fight tax evasion. I am pleased that we were able to agree to ensure that the balance is maintained between this legitimate aim and the principles of the internal market.
"Of course I am also pleased that we have been able to find a pragmatic outcome to this case to avoid lengthy court proceedings."
The UK authorities now allow shoppers caught for the first time with amounts of booze and tobacco so large that it is clearly not for personal use to pay duty and a penalty against the goods.
Previously the policy was to seize the vehicle and the goods.