There are problems with this being "trench art" . It's hard to imagine anything military it easily could be made from- not a cartridge or artillery shell. Also, the gear teeth on the sides are too regular to have been knocked out by someone sitting with a file in a shed, they were made by a machine, like a gear hobbing machine, milling machine, or ( more likely, for jewelry) an engine turning lathe. The Iron Cross looks to be cast and chased, and then either riveted or carefully soldered to the cylinder, which is also pretty sophisticated: those are jewelry techniques. If this was picked up during the war by your grandfather, it was newly made, not re-purposed war materiel.