Muslims occasionally seen in German city (3)
I believe the answer is:
ulm
'german city' is the definition.
(Ulm is a city in Germany)
'muslims occasionally seen' is the wordplay.
'occasionally seen' means one should take alternating letters (letters taken on occasion).
The alternate letters of 'muslims' are 'ULM'.
'in' is the link.
(Other definitions for ulm that I've seen before include "German city on the Danube, home to Einstein and the world's tallest church steeple" , "German town" .)