I don’t know specifically how C1 operates, but some card issuers do claw back bonuses if purchases used to meet the initial spend are later refunded. Their intent is to prevent people from buying a lot of stuff, receiving a bonus, then returning it all and keeping the bonus for what ultimately amounts to no spend. The patterns they look for are awfully similar to what happened here.

Do you have the option of receiving your refund in the form of a voucher instead of putting it back onto your card?