Let's start with insurance.
Sellers buy insurance to cover themselves against loss or damage in transit.
In this case, the seller packed the item poorly, and in such cases the shipping company (post office?) would not pay out on any insurance because they were not at fault.
NOTE- the insurance is for the benefit of the seller, not the buyer.
It is true, especially when the seller and the buyer are in different countries, that it is expensive for the buyer to return the unacceptable item with Proof of Delivery.
EBay now has a program which forces sellers to send a return shipping label to unhappy buyers in the USA, but this is not possible for buyers outside the USA. (And that's not an eBay rule. There is no mechanism that will allow a US resident to buy a Canada Post shipping label even when the transaction has nothing to do with eBay.)
Because your seller is being difficult, open a Dispute with the Resolution Centre at the bottom of this page. Ask if the seller will accept pictures of the damaged item and of the damaged packaging.
If he says yes, then your problem is solved. He can inspect the pictures and refund you without the expense (for either of you) of a return.
I doubt he will agree, from what you have told us, but it's worth a try.
But if he won't and eBay/Paypal will not process the refund without proof of return delivery, drop the case.
Leave appropriate feedback if you can. "Poor packing meant damaged on arrival. No refund given." would cover it. More important would be to leave the Detailed Seller Ratings which eBay pays much more attention to.
A normal transaction gets Five Stars. The lowest Rating isONE Star. No stars is a free pass.
If the seller's DSRs drop below 4.3, his ability to list may be restricted by number or by value, his fees may rise, or his selling account may be closed.
THEN
Move to the credit card you really paid with. PP is just a mediator. Phone the 1-800 number on the card and ask the customer service rep about a chargeback.
She will need information about the transaction. Dates, currency, payments, transaction numbers. Offer the pictures the seller would not accept.
Some cards will tell you to return the item but allow proof of shipping which is much cheaper than proof of delivery. Some won't. Some will just take your word.
But do go to eBay/PP first. Get your problems with the seller on record. You will be helping future buyers to choose wisely.
