That's a very fancy way of saying it, but is is incorrect. "no come" in this sentence is present continuous, whereas you have translated in the imperfect. By using the imperfect you incorrectly leave open the possibility that the person does now eat rice, whereas the correct translation (using the present continuous) does not.

Technically it is correct, and probably should be marked so. But maybe DuoLingo wants you to remember that the 3rd person conjugation is also used for Usted, and so is only accepting the Usted option in this case.