Norwegian Muslim rapper Kaveh, who was accused of inciting racism for saying "f**k Jews" during a concert last summer, said the remark was taken out of context and misinterpreted, insisting that he is neither a racist nor an anti-Semite.

After reviewing the report filed against 23-year-old rapper Kaveh over allegations of inciting anti-Semitism during a family concert last summer, Norwegian police found no evidence of hate speech and decided to close the case, the Dagen Christian newspaper reported.

During the Haugen Festival in Oslo, Kaveh congratulated fellow Muslims on the end of Ramadan, an Islamic month in which followers of the religion fast for much of the day. He proceeded to ask if there were any Christians or Jews present in the public. After a short break, he said "F**k Jews". After yet another pause he added "Nah, just kidding", provoking condemnation from both concert-goers and the event's organisers.

However, police saw no reason to press charges or push for a trial.

"The way it was framed, it falls within the artistic freedom of speech which artists and performers enjoy in making provocative or satirical statements," the police ruled, as quoted by the newspaper.

State Attorney Trude Antonsen backed the police's assessment. Backing the decision to close the case, she deemed Kaveh's statement as "highly derogatory, offensive and false". Nevertheless, she added, it is not affected by the criminal code.

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Last summer, several people, including Ervin Kohn, the leader of the Norwegian Mosaic Community and deputy leader of the Anti-Racist Centre, chose to report the artist to the police for racism.

Kohn has expressed his anger at the decision, vowing to appeal the case to the Attorney General in hope of bringing it to court. Kohn stressed that he reported Kaveh's statement as private person, not an official.

Kaveh later stated that the quote was taken out of context and misinterpreted.

"I'm not a racist, and I'm not a Jew-hater," he assured.

Kaveh Kholardi is an Oslo-based rapper, songwriter, artist and producer of Iranian ancestry. He is a practising Muslim and is known for having contributed to "The Best of US", Norway's official song for the 2014 Winter Olympics in Sochi.