The buyer of my item would like to collect the item but I have the postage label already, he has been charge for the postage. Ebay is stating that I cannot cancel the label.
Sounds as though just by purchasing a label, your item is marked as dispatched, which means the label is classed as used, therefore you cannot cancel for a refund.
This would not happen if you dealt with your own postage instead of relying on ebay.