I would send him a response that says something like:
"The console was not banned, I used it and it was working perfectly up until the time I shipped it, so either you're lying and trying to scam me, or something screwed up on Sony's end. So here is what I'll do, since I personally verified before shipping it that it was in perfect working condition. I have the serial number on the console logged and with photos. If you send me back a console that has a different serial number or has been tampered with, I will report you to eBay, Paypal, and the police for mail fraud. I have your information and mail fraud is a federal crime. Trust me, you don't want to go down that road for a mere xx dollars. If everything is indeed as you claim, then your refund will be processed once my original console is returned 100% in the condition I sent it in and with the issues you described. Otherwise, legal action will be taken. Thank you."
Yes, usually you can scare scammers like this.
I would highly advise trying this since you don't have much backup.
If all goes well he'll respond with something like "oh never mind, i got it working"