Dear watchesforindia,
To receive a Final Value Fee credit to your seller's account, you need to open and close a case in our Resolution Center: http://resolutioncenter.ebay.in/
(Giving your buyer a refund doesn't automatically result in a Final Value Fee credit.)
Depending on how you close the case, you may receive a Final Value Fee credit. For more about the credit, see Receiving a Final Value Fee credit: http://pages.ebay.in/help/sell/credits.html
If you started out trying to get the buyer to pay, but then you both decided to end the transaction and refund the buyer, see what to do when a buyer doesn't pay (unpaid item process): http://pages.ebay.in/help/tp/unpaid-item-process.html
If you need to cancel the transaction because you as the seller have a reason you can't complete the sale (like the item is broken, gone, or sold to someone else), see canceling a transaction: http://pages.ebay.in/help/sell/cancel-transaction-process.html
Please find the link below regarding FVF for refunded items:
http://pages.ebay.in/help/pay/refund-buyer.html#receiving
Regards
Seema