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I assumed you accepted the damage was caused in transit or had been missed before you sent it.
First he needs to prove the above: obviously ask for photos first. Do you have photos of the affected area from before you sent it? Is the damage in a place that could affected in transit: eg if its on the inside of the stay, it seems unlikely, especially as he obviously saw no external damage to the package.
If it comes down to it being your word against his, then my experience is that eBay/PayPal will favour him.
So it's then a question of limiting your losses: act reasonably and demonstrate as much to eBay/PayPal, by offering a way out of the stalemate, ie a partial refund, before they decide it for you (which will likely be on less favorable terms than you can negotiate yourself).
He has a beef with the import duty, which is why I suggested paying them rather than trying to come up with a number to reflect the damage.
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Scilly.Suffolk
ok , buyer has stripped frame down , and as said claims damage , claimed poor packed but offers no evidence eg pics , and I have never had an issue re packing before , was s pina Montello with da 740? , so hope I don't lose bike and have to refund