Charlie's gift-wrapped instrument (7)
I believe the answer is:
bassoon
'instrument' is the definition.
(type of musical instrument)
'charlie's gift-wrapped' is the wordplay.
'charlie' becomes 'ass' (both can mean a foolish person).
'gift' becomes 'boon' (I've seen this before).
'wrapped' indicates putting letters inside.
'ass' placed into 'boon' is 'BASSOON'.
(Other definitions for bassoon that I've seen before include "Instrument heard by Wedding-Guest" , "Low wind instrument" , "Double-reed instrument" , "wind player" , "Instrument - no ASBOs (anag)" .)