Page 8 of this ACCC document addresses refunds vs store credits when the item/transaction breaches statutory conditions. However this return appears to come under ‘change of mind’ and change of mind policies are at the discretion of the business.
Finder is usually reader friendly, accurate, and cuts through lots of unnecessary verbiage. The second section applies.
The crux of the problem is that the shop web site had conflicting statements, one on the home page that was not noticed, and another on the returns policy page.
The one on the home page is aligned to the bottom frame in black and white and not as noticeable as it probably should be, but probably serves as the notice having been posted.
It appears the statements on the home page and the T&C page have been coordinated. ie. too late if not previously snapped.
Small businesses are not unique in failing to assure coordinated and consistent messages. but when they error they are usually more forthcoming in copping it to satisfy the customer and many customers have been doing it tough also.
It is not obvious to me how a CAT would rule since it is apparently not an intent, but is an administrative/production error since corrected. Since it is a change of mind I suspect the shop would prevail on the balance of probability.
As for the ‘not free’ postage you need to look at your tax invoice to see if you consciously selected or unconsciously accepted an express option at your cost.
Sorry, but that is all I have and not what you wanted to hear.