I don't think the discount has been reoffered, in which case there's no incentive not to appeal!
Deadline to appeal is, I think, 24 June. What are your dates away?
Based on their logic, they could note you parked without a permit at 9.01am, you could add a permit at 9.02am, they could check you every hour during the day, all while confirming a valid permit is in force, then you remove the permit at 4.58pm and they serve a PCN at 4.59pm.
They've also admitted that you were legally parked while you had a permit (i.e. at 12pm) but then said the 10 minute grace period started at 11.54pm at a time during which you were covered by a permit. It should start from the point your period of permitted parking ceases which by definition cannot be a time while your vehicle is covered by a valid permit.
As the legislation says:
"No penalty charge is payable for the contravention where the vehicle has been left beyond the permitted parking period for a period not exceeding 10 minutes."