If the item was sent using Simple Delivery, and you started a return on the basis that it was damaged in transit, then you will have been compensated by Ebay and not the seller.
They refund you, the seller is paid for the item, and you can dispose of the damaged item however you see fit as it is yours to keep.
"There are two ways to be fooled. One is to believe what isn't true; the other is to refuse to believe what is true.”
Søren Kierkegaard, Danish philosopher (1813 - 1855)