The item must be sent within a certain timeframe once a return is accepted/postage label supplied. Otherwise the dispute will be closed in seller’s favour.

If you are to pay for return postage, I agree with jellybirddesigns; decide whether it is worth it. If the item is worth more than postage cost (especially if it’s quite a bit more), I’d go ahead, and in that case you don’t need to be negotiating with the seller unless you have good reason to think that the seller will refund you without the need to return.

I would be dubious about anything said by the seller, given that he’s tried the old “close the case” trick.