Just to update on what happened:
After calling Ebay and PayPal many, many times and looking at searching forums, the conclusion is that they can't help me with shipping. Ebay and PayPal are now separate companies. At the time that I opened the claim, if you opened a claim with PayPal, you couldn't open it with Ebay and vice versa.
I didn't ship it back because it would have cost me about $50 CAD (I went to 3 different place for quotes). I was charged $21.10 for shipping from Australia to Canada when I ordered so I think the seller had some kind of business post plan. (I bet the seller knows it costs so much to return and that's why he/she's so blatant.) yguo4529 is still on eBay.
As a result, I called VISA. A wonderful lady at Visa named Debra stated as long as I have the evidence that it's a counterfeit good, they can look into it and return the amount back to me. The only thing is that it takes up to 48 weeks.
In Canada, PayPal isn't considered a bank so there is no protection under the Bank Act. They only offer the original amount you paid back. They don't offer anything beyond that. So if you've been victim to a fraud, PayPal will require you to sent the item back to the seller and YOU HAVE TO PAY THE SHIPPING.
My lesson in this: I'm never using PayPal again.