Instructions
Play through "Metal Gear Solid: Peace Walker" under normal circumstances until your character and development team reaches "Level 12." You will naturally gain experience and level up throughout the course of the game, so just be patient until this happens. You cannot make C4 until you are at "Level 12."
Enter the "Mother Base" menu on screen. Select the "Develop Weapon" option.
Choose "C4." Your weapon development team will begin to work on creating C4 that Snake can use during missions in the game.
Return to the main game and continue to play missions until you receive a message indicating that the C4 has been successfully developed. Return to your Mother Base and select the C4, which adds to your inventory. You can then use C4 on various levels in the game as you see fit.