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Buyer had wrong address. Package sent and returned

What is the process for a packaged that was sent back and undeliverable, address vacant? I did send a request for the new shipping cost via paypal and the buyer did send new address but then asked for an invoice to be sent via eBay and I told them that was not possible. They asked for a refund and I told them to open a case. I don’t mind refunding minus shipping and eBay fees but refund option is only taking away eBay fees. What do I do next? 

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