Red Bull on Tuesday lost their appeal over Daniel Ricciardo's disqualification from second place in last month's Australian Grand Prix.
The world champions had sought to overturn the stripping of Ricciardo's runner-up finish behind Nico Rosberg in Melbourne for breaching fuel flow regulations.
FIA's International Court of Appeal issued a ruling after a six-hour hearing Monday during which Mercedes had called for the punishment to be harsher.
Ricciardo took the anticipated reverse on the chin, declaring on Red Bull's Twitter account: "I'm stronger for it & hungrier than ever. Not that I need any more motivation, I'm pumped!"
Red Bull said they "accepted the decision" but were "disappointed" with the outcome which left their new Australian driver 10th in the championship with 12 points, 49 behind Mercedes' pacesetter Rosberg ahead of Sunday's Chinese Grand Prix.
The four-time world champions are fourth in the constructors' standings on 35 points with Mercedes leading on 111.
The ruling is a blow to their world titles hopes as a reinstatement would have been worth 18 points which would have lifted Ricciardo into third in the driver's race and his team into second in the constructors' standings.
In a statement Red Bull commented: "We are of course disappointed by the outcome and would not have appealed if we didn't think we had a very strong case.
"We always believed we adhered to the technical regulations throughout the 2014 Australian Grand Prix.
"We are sorry for Daniel that he will not be awarded the 18 points from the event, which we think he deserved.
- Ricciardo's roller-coaster ride -
"We will continue to work very hard to amass as many points as possible for the team, Daniel and Sebastian (Vettel) throughout the season.
"We will now move on from this and concentrate on this weekend's Chinese Grand Prix."
Before the hearing Red Bull team principal Christian Horner had described Ricciardo's 'lost' points as "vital, every point is vital".
Red Bull were found guilty of using more than the 100kg fuel limit per hour in Melbourne and also of ignoring repeated FIA advice during the race to limit their fuel consumption.
Red Bull had argued that the fuel flow sensor at the centre of what has been dubbed 'Fuelgate' was "unreliable, inconsistent and immature technology".
Ricciardo, 24, has had a roller-coaster start to his debut season. In Malaysia he drove off with a loose wheel after a pit stop, and in Bahrain he succeeded in taking fourth despite starting from 13th, outshining his teammate Vettel.
FIA said it would make public its reasons for Tuesday's verdict in full later this week.
Confirming the five-man Appeal Court's verdict a brief FIA statement read: "The court, after having heard the parties and examined their submissions, decided to uphold the decision No56 of the stewards by which they decided to exclude infiniti Red Bull Racing's car No3 from the results of the 2014 Australian Grand Prix."
With Ricciardo's disqualification rubber-stamped it left McLaren's Kevin Magnussen as the promoted runner-up in Melbourne, with his teammate Jenson Button third.
The Ricciardo affair has its roots in the raft of new changes introduced this season including the introduction of 1.6 litre V6 turbo hybrid engines.
That has left the likes of Red Bull and Ferrari struggling to come to terms with the dramatic shift in F1's technical landscape.
Mercedes in stark contrast are flying high, the German constructor winning the opening three races and propelleing Rosberg and teammate Lewis Hamilton to the top of the drivers' standings.