The seller should not be paying any import duty on an item that was shipped out and returned. He isn't importing anything, the item started in his country and is ending therre. Duty should not apply. I shipped a streamer to europe for upgrade and it took a while but I eventually figured out a code that didn’t charge either of us import duties.
In your case, it sounds like the seller is just trying to minimize the import duty that he is wrongly charged so I would support that. Better answer would be to find the harmonized tariff code for "returned goods" or something similar so that he is not charged anything.
Jerry