Miles get deducted for any credits to the M&M CC account, it doesn't matter whether it is a genuine refund for a previous purchase or something else.
It happened to me that a merchant (car rental in this case) credited 1500€ to my cc for a damage occured to my belongings during a car rental (car was burning due to short circuit). It had nothing to do with the rental fee for which I got the miles, but I had to "pay" 1500 miles to M&M in order to get my money.@:-)