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.