Terumot, Chapter One, Mishnah Four
Our mishnah teaches that one should not take terumah from something that has not been completely processed for a product from the same type of produce that has already been processed.
1) They should not take terumah from olives for oil, or from grapes for wine.
2) If one did: Bet Shammai says: there is terumah in [the olives or grapes] themselves.
3) But Bet Hillel says: the terumah is not terumah.
Section one: One should not take terumah from olives or grapes (unprocessed) in order to exempt oil or wine (processed). In such a case where one has olives and olive oil, or grapes and wine, he must take the terumah from the oil or the wine in order to make these products permitted for consumption.
Section two: If, despite the rule in section one, one does take terumah from the olives or grapes in order to exempt the oil or wine, Bet Shammai holds that there is terumah in the olives and oil that he separated, although they are not completely terumah. These olives and grapes must be treated with the sanctity of terumah mixed with non-sacred produce. However, the wine and oil are still considered as if terumah has not been separated from them.
Section three: According to Bet Hillel, the grapes and olives he declared to be terumah are not terumah at all.