Hi there,  Once the buyer raised a case, you have 72hrs (I think), in which to resolve the matter, so basically you have to refund the buyer, the item must be delivered before the case times out, or you need to convince the buyer to close the case.

If the matter is not resolved in time, it is auto closed in the buyers favor and a refund issued.  Ebay at their discretion can extend the case, usually when the original item still shows in transit and external delays exist..

You have 30 days in which to appeal ebays decision, but dont launch an appeal until you have proof that a replacement item has been delivered correctly, or the appeal will be auto closed.  Note you would be hoping for ebay to make a goodwill payment to you, however you may be advised to contact the buyer for repayment.