International eBay buyer is stating he didn't receive package, what to do?

Okay I shipped out an iPhone 5 internationally to the Russian Federation. It shipped out through USPS April 15, 2013. Buyer messaged me saying he still hasn't received the phone. I got tracking for the package but all it says on USPS.com is "Your item was processed through our ISC NEW YORK NY(USPS) facility on April 19, 2013 at 7:51 am. The item is currently in transit to the destination." The buyer has threatened to open a case, and i have had not had the best luck with cases ending in my favor. If it was a $20 thing it would be no big deal i would just refund him, but he paid $670 for it. That's something i don't want to refund. I got registered mail for the item i don't really know what that means though. What can i do about this whole situation?

Wouldn't you be okay with Ebay and Paypal since you have the tracking info? That's all I needed in the past for buyer claims of non-receipt.

Plus it says it's in transit, not lost or delivered yet.

Hopefully somebody will have a better answer, but this is what I would do.
1. Keep in close friendly communication with your buyer.
2. Contact Ebay support immediately and ask them for assistance. They are very helpful.
3. According to the last tracking report it is still in transit. I would believe that and communicate what you've done to know this to the buyer, right away.
4. Also, be very apologetic (regardless if its not your fault--it is in his eyes). And tell him in detail what you've done so far and are going to do to make this right with him.
5. You didn't mention insurance on the product, which is easy to get. Sending anything worth over $100.00 anywhere-I insure.
6. Registered mail means he must sign for it to receive the package, which will be your proof of delivery.

Did you fill out a customs form? Track the registered number using the website below. Most foreign postal services websites isn't compatible with USPS's. What kind of tracking do you have? Registered mail has indemnity coverage up to $48.00 so you should have added more. Make sure you can send an i-phone to Russia legally. Also, what about the VAT-tax and customs fees? I would transfer the funds out of your paypal account. The buyer may not be honest or it could have been stolen. What did you declare on the customs form? Try tracking it using the website below. Select Russian Federation as the destination country.

http://www.trackitonline.ru

http://www.trackitonline.ru/? Service=track

http://digilander.libero.it/fabioalarici/philbur.html