Can Instance Level Collation be different from Database Collation?

Yes

Difference between instance level vs database level

Instance level collation represent server level collation, but database collation represent  that particular database.

Go to SQL Server instance àright click go to properties àGeneral àyou can see server level collation

Now select database got to àproperties àOptions àyou can see collation

Even if you change database collation it’s won’t be any affect on server level collation.