Takes in top paper (8)
I believe the answer is:
foolscap
'paper' is the definition.
(I know that foolscap is a type of piece of paper)
'takes in top' is the wordplay.
'takes in' becomes 'fools' ('fool' can be a synonym of 'take in').
'top' becomes 'cap' (both can mean to beat or outdo).
'fools'+'cap'='FOOLSCAP'
(Other definitions for foolscap that I've seen before include "Paper or book size (from its watermark)" , "About 330 x 200 (or 400) mm size of paper" , "sheet" , "One would not be wise to put this on" , "type of paper" .)