Australian luxury marketplace Cettire has responded to allegations that it has failed to process duty payments properly on shipped items.
The accusations arose from an article by the Australian Financial Review on Wednesday, March 6, with the authors stating that the publication purchased four items from Cettire to test how the company operates. AFR's bill totalled $1303.21, including $169.43 in duties fees.
According to the story, the delivery provider DHL reportedly confirmed that no duty or tax was charged for AFR's new products as they did not meet the $1,000 threshold because they were separately shipped.
However, Australian Border Force documents indicate that duties must be paid when the value of one consignment being shipped exceeds $1,000. This includes multiple packages being shipped separately but in the same order - also known as split consignment.
Cettire shared a media statement, saying it believes all applicable duties and other import charges are paid to the relevant authorities at the point of customs clearance - and added that goods are unable to clear customs unless the applicable duties are paid.
Cettire then pointed out the DHL shipping label which the AFR posted in the same article - which shows the words 'Duties & Taxes Unpaid' - saying this language "bears no relation whatsoever to whether or not duties were applicable to the shipment, nor whether duties were actually paid."
“Rather, it refers to a service provided by DHL whereby it facilitates the payment of duty on behalf of its customer (Cettire),” Cettire wrote.
“In this specific example, Duties & Taxes Unpaid simply means that that service was not provided by DHL on the relevant shipment. It does not mean that there is any outstanding duty payable by the customer or by Cettire in relation to the shipment. Any implication in the article to the contrary is incorrect.
“In Australia, Cettire has a direct debit arrangement in place with the Department of Home Affairs to facilitate direct payment of applicable duties prior to customs clearance.”
In Cettire’s first half results for FY24, it reported an average order value of $791. The company noted the estimated duty charges and duties payable apply to a small minority of shipments to Australia.
According to Cettire, its business model is to ship to customers DDP or delivered duty paid. Through this shipping model, the luxury marketplace manages the cross-border logistics process, including all customs clearances.
“Further, the model enables customers to purchase with the confidence they will not be subject to additional charges when their purchase is processed as an incoming shipment through customs.
“The company believes this is the best way to provide customers with a seamless experience having regard to the inherent complexities of cross-border e-commerce.”
Cettire added that it is common practice for an estimate of the duties and import fees payable for an order to be charged at checkout.
“From time to time, the actual duties payable when the goods are processed by customs may vary versus that estimate.
“Importantly, any variances in actual duties and fees paid to a customs authority versus the amount paid by a customer at checkout are the responsibility and risk of Cettire.
“It is frequently the case that the duties and import fees payable to a local customs authority are higher than the estimated amount originally received from the customer and Cettire bears this additional cost without attempting to pass it on to the customer.
“It is also possible that, in certain scenarios, the amount of duty estimated at checkout is higher than the actual amount paid to a local customs authority.”
According to Cettire, it accounts for revenue for any estimated duties or import fees charged to customers as well as a corresponding cost for the duties and import fees paid, in accordance with accounting standards.
“On balance, the company believes that neither duty revenues, nor duty expenses, nor the net P&L impact are material.”
Amid the furore, Cettire responded to an ASX price query regarding a 27% drop in its share price on Wednesday, noting the AFR article “may have contributed” to the price movement.
“The article did not contain any material non-public information regarding Cettire, and it is difficult to see a direct connection between any information in the article and the price movement.
“To the extent that the article may have incorrectly drawn implications regarding Cettire’s customs clearance practices, we have already released an announcement to ASX today to clarify the position.
“Again, our announcement did not contain anything which we consider to be material non-public information.”