Thats the crankcase breather canister, looks like you have an engine out of a bay window van, they where part of the crankcase casting on the CU engine
1982 Camper 1970 1500 Beetle Various Skoda's, Ariel Arrow
Its whole purpose in life is to catch little droplets of oil that come out of the crankcase in the breather pipes, so its supposed to be oily inside, all normal.
2.5 Quad Cam Scooby engine . Westfalia California 1989