I have a friend who received some goodies from a company for their contribution. However, DHL is asking for duty that's more than the cost of the goodies. Can they refuse the package at the time of delivery? They won't have to pay any duty if they refuse to accept the package, right?

if the duty is not paid, DHL will hold on to it for a while and then either return or destroy

Yes, they can refuse the package and then won't have to pay any duty.

It’s not DHL but they Govt asking for duties 🙃 but yes, you can refuse to pay. I have done so on some occasions and sent it back and even received a refund from Amazon UK. They even got the stuff back after a month. (Royal post / India post).