The saying (idiom) goes like this: Cut the Muster, not Cut the Mustard. The modern sense of the idiom is to succeed; to have the ability to do something; to come up to expectations.
This etymology seems plausible at first. Its proponents often trace it to the American Civil War. We do have the analogous expression “to pass muster,” which probably first suggested this alternative; but although the origins of “cut the mustard” are somewhat obscure, the latter is definitely the form used in all sorts of writing throughout the twentieth century. Common sense would suggest that a person cutting a muster is not someone being selected as fit, but someone eliminating the unfit.
(Washington State University)