I tried creating a custom list by the method mentioned in this tutorial by Saurabh Khatri.
I deployed the list to another site. After deployment the instance of the list was visible in the Quick Launch section.
But when you click on Lists which is suppose to display all the lists for that site; the custom list is not visible. The situation is same in SharePoint designer 2010 also.
EDIT : 17-March-2013
I found another article on Code Project by Jean Paul V.A which helped me solve the issue.