Clown celebrity appearing in hoax (7)
I believe the answer is:
costard
'clown' is the definition.
(I've seen this before)
'celebrity appearing in hoax' is the wordplay.
'celebrity' becomes 'star' (I've seen this before).
'appearing in' is an insertion indicator.
'hoax' becomes 'cod' (I've seen this before).
'star' put inside 'cod' is 'COSTARD'.
(Other definitions for costard that I've seen before include "cooker" , "Clown" , "Fruit" , "Cooking apple" .)