Terumot, Chapter Eleven, Mishnah Two
This mishnah deals with the halakhic status of various types of fruit juices made from terumah.
1) [A non-priest drank] honey of dates, wine of apples, vinegar from winter grapes, and all other kinds of fruit juice of terumah:
a) Rabbi Eliezer makes him liable to repay their value and the fifth;
b) But Rabbi Joshua exempts from the fifth.
2) Rabbi Eliezer declares [these] susceptible to uncleanness as liquids.
3) Rabbi Joshua says: the sages have not enumerated seven liquids as those that count spices, but rather they stated: seven liquids make things susceptible to uncleaness, whereas all other liquids do not make susceptible.
Section one: One should not use terumah to make these liquids, because these are not the usual way these fruits are eaten, and therefore it diminishes their importance. This is different from making wine from grapes or oil from olives, for that is what is usually done with grapes and olives, and in no way diminishes their value.
Rabbi Eliezer says that if a non-priest drinks one of these liquids, he is liable to pay back the value and the added fifth, as one always is when one eats terumah.
Rabbi Joshua exempts the non-priest from paying the added fifth because these liquids do not have the same rule that governs the fruits from which they came. Nevertheless, he has to pay back the value because he ate something that didnt actually belong to him.
Section two: The mishnah now brings a related debate concerning fruit juices, namely whether they can make another food item susceptible to receiving uncleanness. Food cannot become impure unless it has come into contact with a liquid. The question is whether fruit juice counts as a liquid. As we saw in section one, Rabbi Eliezer treats fruit juice the same way he would treat wine or oila non-priest who drinks them is liable to repay the value and the added fifth. So too here, food that comes into contact with one of these is susceptible to impurity.
Rabbi Joshua disagrees and holds that only the seven liquids listed by the rabbis, (dew, water, wine, oil, blood, milk, and bee honey) make foods susceptible to impurity. When the rabbis listed these liquids in Mishnah Makshirim (which well get to eventually) they werent listing things in the way a spice makers list things, which was not accurate. Rather, their list was accurate and since fruit juice is not on the list, it cant be put there.