Need to develop a hierarchical structure from flat file using two identifiers in Input XML - xslt

Question

I am trying to develop a hierarchical structure from a flat file thus i need to establish parent child relationship in the desired output. Could you please suggest a method in XSLT 2.0.
Please find below the input XML which contains LEVEL and IDENTIFY tags on the basis of which i was trying to build the parent child relationship.
All the IDENTIFY tags with 'IB' should be in a separate tag like LOCATION and all the IDENTIFY tags with 'ER' should be in a separate tag like ADDRESS in output.
Input XML:
<Path>
<item>
<LEVEL>1</LEVEL>
<RANK>340</RANK>
<TYPE>T</TYPE>
<DESC>Sheet</DESC>
<NAME>I</NAME>
<IDENTIFY>IB</IDENTIFY>
</item>
<item>
<LEVEL>2</LEVEL>
<RANK/>
<TYPE>M</TYPE>
<DESC> Handler</DESC>
<NAME>D</NAME>
<IDENTIFY></IDENTIFY>
</item>
<item>
<LEVEL>2</LEVEL>
<RANK>341</RANK>
<TYPE>M</TYPE>
<DESC>handler </DESC>
<NAME>I</NAME>
<IDENTIFY>IB</IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK/>
<TYPE>M</TYPE>
<DESC>pdf</DESC>
<NAME>D</NAME>
<IDENTIFY></IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK>330</RANK>
<TYPE>M</TYPE>
<DESC>SERVO </DESC>
<NAME>L</NAME>
<IDENTIFY>ER</IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK>331</RANK>
<TYPE>M</TYPE>
<DESC>SENSOR</DESC>
<NAME>L</NAME>
<IDENTIFY>ER</IDENTIFY>
</item>
<item>
<LEVEL>2</LEVEL>
<RANK>342</RANK>
<TYPE>M</TYPE>
<DESC>xyz</DESC>
<NAME>I</NAME>
<IDENTIFY>IB</IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK>335</RANK>
<TYPE>M</TYPE>
<DESC>FILTER</DESC>
<NAME>L</NAME>
<IDENTIFY>ER</IDENTIFY>
</item>
<item>
<LEVEL>2</LEVEL>
<RANK>343</RANK>
<TYPE>M</TYPE>
<DESC>safety </DESC>
<NAME>I</NAME>
<IDENTIFY>IB</IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK/>
<TYPE>M</TYPE>
<DESC>doc</DESC>
<NAME>D</NAME>
<IDENTIFY></IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK>337</RANK>
<TYPE>M</TYPE>
<DESC>ROD </DESC>
<NAME>L</NAME>
<IDENTIFY>ER</IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK>338</RANK>
<TYPE>M</TYPE>
<DESC>CYL</DESC>
<NAME>L</NAME>
<IDENTIFY>ER</IDENTIFY>
</item>
<item>
<LEVEL>3</LEVEL>
<RANK>339</RANK>
<TYPE>M</TYPE>
<DESC>COMPRESSION </DESC>
<NAME>L</NAME>
<IDENTIFY>ER</IDENTIFY>
</item>
<item>
<LEVEL>2</LEVEL>
<RANK>345</RANK>
<TYPE>M</TYPE>
<DESC>Nylon</DESC>
<NAME>I</NAME>
<IDENTIFY>ER</IDENTIFY>
</item>
</Path>
Desired Output:
<LOCATION>
<LEVEL>1</LEVEL>
<RANK>340</RANK>
<TYPE>T</TYPE>
<DESC>Sheet</DESC>
<NAME>I</NAME>
</LOCATION>
<LOCATION>
<LEVEL>2</LEVEL>
<RANK/>
<TYPE>M</TYPE>
<DESC> Handler</DESC>
<NAME>D</NAME>
</LOCATION>
<LOCATION>
<LEVEL>2</LEVEL>
<RANK>341</RANK>
<TYPE>M</TYPE>
<DESC> handler </DESC>
<NAME>I</NAME>
</LOCATION>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK/>
<TYPE>M</TYPE>
<DESC>pdf</DESC>
<NAME>D</NAME>
</ADDRESS>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK>330</RANK>
<TYPE>M</TYPE>
<DESC>pqr</DESC>
<NAME>L</NAME>
</ADDRESS>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK>331</RANK>
<TYPE>M</TYPE>
<DESC>SENSOR</DESC>
<NAME>L</NAME>
</ADDRESS>
<LOCATION>
<LEVEL>2</LEVEL>
<RANK>342</RANK>
<TYPE>M</TYPE>
<DESC>xyz</DESC>
<NAME>I</NAME>
</LOCATION>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK>335</RANK>
<TYPE>M</TYPE>
<DESC>TER</DESC>
<NAME>L</NAME>
</ADDRESS>
<LOCATION>
<LEVEL>2</LEVEL>
<RANK>343</RANK>
<TYPE>M</TYPE>
<DESC>SAFE</DESC>
<NAME>I</NAME>
</LOCATION>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK/>
<TYPE>M</TYPE>
<DESC>doc</DESC>
<NAME>D</NAME>
</ADDRESS>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK>337</RANK>
<TYPE>M</TYPE>
<DESC>RST/DESC>
<NAME>L</NAME>
</ADDRESS>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK>338</RANK>
<TYPE>M</TYPE>
<DESC>CYL</DESC>
<NAME>L</NAME>
</ADDRESS>
<ADDRESS>
<LEVEL>3</LEVEL>
<RANK>339</RANK>
<TYPE>M</TYPE>
<DESC>COMP</DESC>
<NAME>L</NAME>
</ADDRESS>
<LOCATION>
<LEVEL>2</LEVEL>
<RANK>345</RANK>
<TYPE>M</TYPE>
<DESC>Nyl</DESC>
<NAME>I</NAME>
</LOCATION>