If you are in mange payments then there is an easier solution and better protection for you.
To start with take a screen shot of Fed ex where it says refused.
Obtain a copy of Fed ex label or take a photograph of label when package when it arrives back making sure that whole of address including tracking number can be read.
When item is returned to you then send buyer a message advising him that his item has been returned to you. Itemise all expenses including original cost of sending item, any Return postage cost, eBay fees and any other genuine expenses that you have occurred and ask the buyer what he would like you to do. attach the copy of label if available and screen shot of Fed ex showing delivery was refused.
He will either ask you to resend his item or he would want his money back.
If he wants the item then ask him to pay the charges you have listed through Pay pal and advise him of your email address (as shown on your pay pal account) and to send you a message after he has paid.
Once payment is received then send the item again and send him a copy of label used through eBay and upload tracking on Pay pal.
If he wants his money back then ask him that as he has not received his item then he must open an item not received case( INR) respond to the case with updating tracking and in comments state delivery refused, Please refer to eBay messages.
Either your buyer will escalate the case or eBay in due course will almost certainly close the case without a refund to buyer.
If original payment was through Manage payments then whole matter should be over and if pay pal were involved in original payment then he may open a charge back case and all you can do is send label, screen shot and a history of what happened including eBays case decision and case may go in your favour but this is not guaranteed.
Hope all works out to your satisfaction.
