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Sounds.. strange. Why would ebay keep the package? What would they do with it? Sounds more likely that it's thrown away somewhere.

eBay may keep it, destroy it, or do whatever with it, who knows? The key point is that neither seller nor buyer receive it.

Had this happen multiple times with nicotine patches, which you are allowed to import into Canada.

Eventually gave up and bought from Amazon.com (was cheaper than .ca).