Blend in colour dismissed (7)
I believe the answer is:
refused
'dismissed' is the definition.
(thesaurus)
'blend in colour' is the wordplay.
'blend' becomes 'fuse' (synonyms).
'in' is an insertion indicator.
'colour' becomes 'red' (red is a kind of colour).
'fuse' inserted within 'red' is 'REFUSED'.
(Other definitions for refused that I've seen before include "Was unwilling to accept" , "turned down appeal" , "Declined, rejected" , "Not accepted" , "Said no (7)" .)