Otherwise dunked in tea, buns served here? (7)
I believe the answer is:
chelsea
'buns served here?' is the definition.
(Chelsea buns)
'otherwise dunked in tea' is the wordplay.
'otherwise' becomes 'else' (synonyms).
'dunked in' indicates putting letters inside.
'tea' becomes 'cha' (cha is a type of tea).
'else' placed into 'cha' is 'CHELSEA'.
(Other definitions for chelsea that I've seen before include "Kind of bun that's flat" , "Where you might get buns" , "The Blues of Stamford Bridge" , "Bunny" , "Cheyne Walk neighbourhood?" .)