No.
The seller should be telling you to mark the item as Returned Merchandise. It would also help him if you included a copy of the original (paid) invoice. You should be able to print out something satisfactory from Paypal.
He does not pay duty on returned items.
Use Air Mail. Use Signature Confirmation. Use tracking.
Actually given the value, check out the cost of shipping by courier, rather than by CanadaPost/China Post. Couriers usually include signature, tracking and insurance in the price.