Returning an item

Hi,

 

I sold an item which turned out to have a slight fault.

 

The buyer returned the item and i went into my Paypal account directly and refunded the purchase and sent a payment for the return postage.

 

However, how do i now cancel the item in ebay?

 

I have been into the resolution centre and clicked cancel sale, however it then explains that when i click confirm it will instruct Paypal to refund the item (which i've already done directly).

 

How do i proceed?

 

Thanks

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