Confusion, with religious festival returning as new (7)
I believe the answer is:
melange
'confusion' is the definition.
(a melange is a mixture or confusion of things)
'religious festival returning as new' is the wordplay.
'religious festival' becomes 'mela' (term for a Hindu festival).
'returning' says the letters should be written backwards.
'as' becomes 'eg' (I've seen this in other clues).
'new' becomes 'n' (common abbreviation eg NT for New Testament).
'eg'+'n'='egn'
'egn' in reverse letter order is 'nge'.
'mela'+'nge'='MELANGE'
'with' acts as a link.
(Other definitions for melange that I've seen before include "Mixed bag" , "A French blend or mixture" , "Varied mixture" , "A French mixture of me with angel" , "Confusion" .)