Star using Circle Line in capital (7)
I believe the answer is:
polaris
'star' is the definition.
(Polaris is an example)
'circle line in capital' is the wordplay.
'circle' becomes 'o'.
'line' becomes 'l'.
'in' indicates putting letters inside.
'capital' becomes 'paris' (Paris is an example**).
'o'+'l'='ol'
'ol' placed into 'paris' is 'POLARIS'.
'using' acts as a link.
(Other definitions for polaris that I've seen before include "Star useful for navigation" , "North Star - missile" , "Star near the N pole of the heavens" , "star (non-movie)" , "weapon sailors unleash" .)