can we use present continuous tense in the following context?

[nathesh2011]

He admits that he is not following instructions.

 

[White Hat]

Yes, it's not incorrect, though "doesn't follow" might be better.

 

[bhaisahab]

He admits that he is not following instructions.

It's fine. It means that right now, at this moment, he is not following instructions.
If not following instructions is a regular habit of his, you could say "He admits that he doesn't follow instructions".