FYi we received the following reply from ebay in response to reporting the cancelled transaction.
Hello,
Thank you for taking the time to report the seller "xxxxxxxx" of the (item xxxxxxxxx) who refused to sell the item you've won and refunded your payment. I appreciate your vigilance in bringing this matter to our attention.
We're sorry you had a problem - the vast majority of eBay purchases go smoothly, but when things go wrong let me assure you that we don't condone such activity and such reports will be taken seriously.
Since your seller won't sell you an item even though you won the auction, they're in breach of eBay policy. Just as you're obliged to pay for an item you win, the seller is obliged to sell it to you.
Please understand that we cannot force the seller to sell this item to you but rest assured that I have already taken the necessary action against the seller in order for them to learn a valuable lesson on completing a transaction with their buyer. This, in return, will prevent these members from this kind of practice in the future.
It's important to bear in mind that not all of the actions that we can take are visible to you or may not be visible immediately. However, let me assure you again that we've taken the necessary action.
I also like to commend you for leaving feedback that reflects your experience with this transaction. Your feedback comment and rating will help other members who are considering buying from this seller. It is also a key tool in helping us weed out bad sellers.
Once again, thanks for taking the time to forward this information to us. We rely on dedicated members such as yourself to help us keep eBay a safe and reputable place to buy and sell.
Kind regards,