If the tracking does not show as delivered then there should be no problem getting a refund from Paypal once this is pointed out, it is then up to the seller to fight it out with Paypal as to who covers the refund, the seller if they do not qualify for seller protection, Paypal if they do.

Paypal will often refuse a refund initially if the seller provides a valid tracking number but that does not mean the buyer cannot dispute the fact that they have received the item, if there is no proof of delivery to their address then they will of course get their money back.