So what the council have stated is that where there are parking bays where one is required to pay, they are free on the days stated and no payment is required. However, this doesn't mean any other restriction for a bay doesn't apply. For instance a bay for permit holders only, is still only for permit holders, and the same where you parked.
Is your vehicle an electric vehicle ? Did you read what the sign said ?
At the moment, I see nothing to support an appeal. The PCN looks correct.