you bought and paid for a watch which you now own. Simple sales contract.
I think you have every legal right to enforce the seller to hand over the watch.
The practicality of this may be very difficult, a legal case will be expensive and painful, and it may be more advantageous just to accept the refund and move on.
The first step may be a lawyer's letter to clarify the position with the seller, and see where you go from there.