Another colleague opened a support ticket with Microsoft Team about same topic but we identified the issue ourself after some troubleshooting.
To answer this thread:
The Container App is Public (Ingress:Enabled, Traffic:Accept from Anywhere, IP Restrictions: Allow ALL). However it is part of a Container App Environment that was using a Network Security Group which limited the external access to ports that weren't specified to be opened. For the Managed Certificate to work it needs to ping with a HTTP (port 80) request. Once that was enabled the certificate was created within a few minutes and rest of application worked fine using Network Security Group.
We found the Blog post and requirements from Microsoft to quite vague and should be improved to include this requirement.