I find it incredible that the buyer, who subsequently sold the watch on, mis- described the watch as automatic. Can’t see how he’s got any chance of returning the watch to the original seller (the OP) after he’d chosen to misdescribe it and sell it on.
I do find it amazing that folks can’t tell the difference between hand- wound and automatic watches, if they can’t they shouldn’t be selling them.
What makes you think that?
The watch was advertised as an Automatic. It is a Manual. It is Significantly Not As Described. Hence the buyer has 30 (eBay) or 180 (PayPal) days in which to raise a - legitimate - SNAD claim, and it will be found in their favour. The "return window" is set by the selling or payment provider; the seller has no say in it.
I'm amazed that the op has posted this. You significantly mis described the watch as an auto when it's a manual. You are a member of a watch forum so it's a given that you have an interest in watches. Why oh why did you describe it as an auto. Some geezer buying a watch on Ebay is not necessarily a watch geek but merely a social buyer.
Personally I think you should refund and not look to squirm out of it because its gone down the line somewhat. You mis sold goods. Be the man and take it on the chin.
The error is yours and your reputation stands on that OP. I would refund, and take it as an expensive lesson.
And it wasn't the kind of watch bought by average Joe without some research.
Had it been a £50 Rotary you might assume some naivety/ignorance by the purchaser.
Imagine Adam inherits a watch which turns out to be a fake. Adam sells the watch to Bob on SC, who then sells it on to Chris a month later. Chris subsequently points out it's a fake and there's no dispute that it's the same watch that originally was sold by Adam. Who do you think the watch should end up with?
Why is this any different?
Why? On this forum we're all a bit obsessed with the details, but don't forget we're an absolute minority in the watch buying realm. Most folk couldn't care less, many won't even know the difference between an auto and a manual. I've personally seen a man returning a relatively pricey watch to an Ernest Jones because the battery ran out the day after he bought it, only to have a sales associate explain that it doesn't have a battery... these folk exist!
The fact the middle guy included automatic in his description of the watch when selling it on suggests to me he genuinely believed it was an auto. If there's an alternate explanation I'm missing it.
I see it as this; there are three parties and two transactions, the second of which you logically cannot have responsibility over. The dispute between the 1st and 2nd buyer is none of your business. You cannot guarantee the condition of the watch, the way it was packed and shipped or even if it was the same watch. If the first buyer is asking for a refund you should point this out to the buyer, eBay, paypal, etc.
To progress further, the return to the 1st buyer must complete (their refund, etc. to the 2nd is their business). It's only at this point that the 1st buyer is an a position to establish the nature and condition of the watch themselves, and then be able to return it to you and request a refund.
Your primary goal here is that the watch must be in your hands, in the condition as sold, for you to be able to make a refund.