Update:

Went to live chat and asked about updating return reason. They said they can't do that- whatever ( lesson cost=postage return address is in NSW).

Whilst on the chat i may have "innocently" mentioned the seller had told me to close the case so they can refund. The chat agent said seller would be spoken to about that.

Discussion with seller still ongoing but ebay has provided postage label. Should i send now or continue negotiation with seller?