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Unfortunately, it's a bit of a crap design. Tube over tube with a nut welded on one side, through which you put a screw to clamp the items together. There's bound to be a gap.It should not need a gap filling gunge.
Use parts that fit, a bit of copper grease and do it up properly.
This product is good to 350C. My guess is that the heat at the joint is much higher than that. How long has it held out for so far?Ours has the same (original Eberspächer) crap design as Andy's. I've previously used exhaust paste (such as Firegum) and while that initially worked, it didn't cope well with the vibrations from heater and/or boat and crumbled away slowly. So this time (new China heater - whole kit cheaper than the Eber parts would've been) I used a high temperature silicone sealant, which stays flexible.
Apply carefully and only over the exterior of the inside tube (the one you slide the other over), else you risk it forming a lip inside which restricts exhaust gas flow.
Example product link (I've used one from a Lidl sale, but essentially the same): 85G GREY HIGH TEMPERATURE SILICONE GASKET Heat Resistant Glue Adhesive Sealant 5906534001443 | eBay