Inspected cotton fabric cut the wrong way (8)
I believe the answer is:
examined
'inspected' is the definition.
(I've seen this before)
'cotton fabric cut the wrong way' is the wordplay.
'cotton fabric' becomes 'denim' (I've seen this before).
'cut' becomes 'axe' (I've seen this before).
'the wrong way' says the letters should be written in reverse.
'denim'+'axe'='denimaxe'
'denimaxe' reversed gives 'EXAMINED'.
(Other definitions for examined that I've seen before include "Closely inspected" , "Considered in detail" , "Questioned, tested" , "Did test" , "Observed and checked out" .)