Customs seizures will go on
Unlimited personal allowances allowed since the single market came into force have fuelled the popularity of so-called cross-Channel 'booze cruises' but have also been exploited by smugglers for huge profits.
But Customs Minister Paul Boateng vowed the anti-smuggling tactics would remain in place.
The dispute centres on the fact that people can be prevented from bringing in alcohol or tobacco not destined for their own use.
The EU has set out guidelines for what it believes are reasonable quantities for personal consumption, to distinguish from commercial volumes.
Guideline exceptions
However, there are complicating factors.
A traveller with amounts over the guidelines could be allowed through if they can prove it is for personal consumption, for example at a wedding party.
Amounts below the guidelines could lead to enforcement action if, for example, the same person was coming through several times a week in an attempt to build up commercial levels of stock.
But single market commissioner Frits Bolkestein believes UK customs could be applying the rules too harshly.
The commissioner has been invited to visit Britain's channel ports by Mr Boateng to see the system for himself and confirm the government's claim that genuine shoppers are unaffected.
The minister has also passed on a dossier showing that 98.8% of the 14 million people who used Channel ports last year passed through without problems.
Of those most were able to prove they were importing only for personal consumption.
But the dossier says smugglers on average had 7,000 cigarettes - nine times over the guideline level - or 20 kilos of tobacco, 20 times the level.
'Action justified'
The average illegal alcohol level was 613 litres per person, more than five times the personal allowance guideline.
The government believes the figures justify its actions and should be enough to satisfy the commission.
When Mr Bolkestein launched his action he said: "The commission is concerned that the controls currently being applied at UK ports and airports, and the sanctions being applied when UK excise duty law is breached, may breach the EU rules which give travellers the right to buy abroad.
"All EU citizens have a right to buy tobacco and alcohol in other member states, duty paid, for non-commercial use and to bring these products home."