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Combine first 5 ingredients in medium saucepan. Using mallet or back of large spoon, lightly crush or bruise spices.
Add 6 cups water; bring to boil over high heat.
Reduce heat to medium-low, partially cover pan, and simmer gently 10 minutes.
Remove from heat. Add tea bags and steep 5 minutes.
Discard tea bags. Add milk and sugar.
Bring tea just to simmer over high heat, whisking until sugar dissolves.
Strain chai into teapot and serve hot.