NEC3 ECC: When under clause 62.3 a Project Manager's reply is an instruction to submit a revised quotation, is he instructing or notifying the Contractor?

I have always believed that the PM instructs the Contractor (under a Project Manager’s Instruction) however a colleague disagrees and believes that the PM notifies the Contractor (under a Project Manager’s Notification)

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I think you have answered your own question here. You rightly say that the PM response can be to instruct a revised quotation. The word there was instruct, not notify.

I think your question here is more a case of “what piece of paper should they be using to confirm this” i.e. if you have separate proforma called a “PM Instruction” and a “PM notification” which one do they use? Franky it does not matter - the important thing is that they are confirming in writing and separately from any other form of communication that they want the Contractor to requote.