
A lot would depend on what the purpose of the puppy was sold for (anything more than a companion is unwise to sell any puppy as), and whether this problem will effect it's suitability for this purpose (is the fault cosmetic). Not something that will have a lifelong negative effect on quality of life.
As you say the problem
'may' need surgery not will need surgery, it sounds like a relatively minor issue,a and offering to have the pup back would have fulfilled your obligation as it was noted right away.
I am guessing this may be an eyelid problem?? If so this if minor (your vet didn't notice)can self correct as a puppies head develops.
So I would not have given them their money back as they had chosen to keep the puppy.
I would have wanted the diagnosis in writing and a second opinion from an opthalmic vet, and if they insisted on keeping the puppy offered them the cost of the second opinion.
I am of course assuming this is not a problem either parent have shown themselves and could not have been foreseen, and that both parents have been eye tested (clinically or DNA as appropriate for each condition known in the breed) and are clear of any hereditary conditions?