Hi,
I have a requirement, i need to modify a ClearQuest schema. This modification is
done based on the application name(application_name field)in the form. For a particular application an additional approval from a group is required. For rest of the application needs to be eliminated.
Is there any way this can be achieved?
Thanks

Yes, that is possible by changing your Action Level3Approval to type RECORD_SCRIPT_ALIAS and pointing it to a Record Script. It should have both the Level1Approval and Level2Approval states as Source states.
Put something like the following in the Record Script:
Depending on the value of AppName, executing Level3Approval will now bring you to the Level2Approval or Level3Approval states.
You could also decide to rename the Level3Approval action to something more generic, because it does not always bring you to the Level3Approval state.