Validtion list varying based on data on another cell

Hi,

I have a validation list to be created on column C where only the list related to the value in Column B should be available to select from drop down list along with 1 default value 'UNKNOWN" in all drop down lists.
As provided in the attached sheet, I have the actual data in Sheet1 and the list mapping in Sheet List. I Have provided only few of the records in Sheet "List" where there are 100 of records in my actual data.
SO when the value under Item in Cell B2 is "Can", I should have the list related to value "Can" from Sheet "List" available in drop-down along with the value "UNKNOWN".
The drop down list on Column C should be like below and I can select one form the list
Tin
Steel
Opener
Lid
UNKNOWN

Can anyone please let me know the steps to achieve this using the formulaes.

Thanks NBVC.

But I have hundreds of values under Item column and to define name range for all of them would be very difficult.
Is there any way to achieve this with out defining the name range for each value in Item field.

Please suggest.

Thank you Very much NBVC.

This works well after applying the above changes.But when I close and re-open the sheet,The drop down list do not appear.When I again goto Data Validation,Settings and click on OK it starts working and list is displayed.Do I need to goto Data validation settings and click Ok each time I open the sheet.

Any help please would be higly appreciated.

Regards
SK