Stars seen around eastern Indonesian island (7)
I believe the answer is:
celebes
'indonesian island' is the definition.
(alternative name of Sulawesi, Indonesia)
'stars seen around eastern' is the wordplay.
'stars' becomes 'celebs' (celebrities).
'seen around' indicates putting letters inside.
'eastern' becomes 'e'.
'celebs' going around 'e' is 'CELEBES'.
(Other definitions for celebes that I've seen before include "Pacific island" , "Anglicised spelling of Sulawesi (Indonesia)" , "English name for Sulawesi" .)