eBay — eBay is refusing to refund returned product

I purchased a Bose unit from a seller on eBay. The product came as dysfunctional. In the reason for return, I placed ‘the product doesn’t fit as justification for return. The seller is refusing to return the product’s full value ($129). On top of that, eBay is refusing to reimburse the shipping and handling ($30). The seller tried to only return $30 back to me. I called them and eBay said the only way I could have asked for a full refund including the shipping and handling was if I stated ‘the item is not working’. The item is indeed not working. I should be receiving a full refund of 174 dollars.