Mr Death awaits the burial of the tax laws

A European Court ruling on re-selling cigarettes could have major implications, says Meg Carter

A European Court of Justice ruling could pave the way for the harmonisation of European taxes following a hearing in Luxembourg yesterday. The case concerns the makers of Death Cigarettes who were forced to stop trading after a High Court ruling in 1995.

Enlightened Tobacco Company owns Death Cigarettes, a brand launched in 1991 by the entrepreneur BJ Cunningham. It marketed itself on the health risks, being sold in a black carton sporting a white skull and cross bones.

In 1994, ETC launched Tobacco Direct, which imported and sold cigarettes direct to customers in the UK. Taking advantage of the EU single market which allows the import of unlimited amounts of cigarettes for personal use, Tobacco Direct was able to offer savings of up to pounds 1 per pack by buying leading brands on the continent where tobacco duty is lower than in the UK.

Customs & Excise said the practice was illegal. ETC won an injunction enabling it to continue supplying its 60,000 customers until the outcome, in May 1995, of a judicial review.

Although Mr Justice Popplewell ruled against the company, he advised ETC to appeal. The case was referred to the Court of Appeal which referred it to the European Court of Justice.

A ruling is expected in April. "Although everyone says we are wrong, the good news is that everyone says we are wrong for different reasons," BJ Cunningham says.

The case hangs on a European Council directive concerning the way in which exciseable products should be treated within Europe. Article 8 of the directive 92/12/EEC states: "As regards products acquired by private individuals for their own use and transported by them the principle governing the internal market lays down that excise duty shall be charged in the member state in which they are acquired."

At issue is whether the phrase "by private individuals and transported by them" sanctions an agent acting on their behalf. Greece's position is that the phrasing does not allow agents; France says it does. "It's really nothing to do with tobacco," Cunningham explains. "At stake is the first principal of European Union - the freedom of movement of goods and people." Tobacco Direct was nothing more than a simple extension of a beer or wine shopping trip to Calais, he claims. The real issue is tax differentials between EU member states. "Our case offers a genuine opportunity to bypass political ennui and effectively harmonise taxes, by allowing all consumers the opportunity of attractive European prices on their cigarettes (or alcohol); not merely those rich enough, healthy enough of well geographically placed enough to travel."

The court's advocate general is expected to make a response by the end of the month; the court will then give its judgment, which will be passed to the Court of Appeal in the UK.

Cunningham concedes the odds appear to be against him. "However, we have right on our side." Should he win, Tobacco Direct plans to sue the UK government for loss of traden