UEFA's emergency committee, including president Michel Platini, confirmed the decision two days before the start of the group stage after a local court had issued a "superprovisional" ruling in favour of Sion at the Swiss club's request.
Scottish club Celtic, beaten 3-1 by Sion in a play-off tie, will take their place in Group I and kick off away to Atletico Madrid on Thursday.
"We have clear rules and regulations that all clubs know before they enter our competitions," Platini, strongly opposed to clubs using civil courts to get their way, told UEFA's website.
"We cannot accept that if one individual club does not get its own way then it goes through any possible system to force its will on the others.
"Two independent disciplinary bodies have ruled on this issue and we must abide by their decisions."
FIFA statutes do not allow clubs and federations to take disputes to civil courts and Switzerland has already been told it has to respect that ruling. A country can ultimately be suspended from international football for failing to obey.
Sion signed six players during the summer despite FIFA saying that they were still subject to a transfer ban.
This was imposed after the club was judged to have induced Egyptian goalkeeper Essam Al Hadari to break his contract with Cairo-based Al Ahli to sign for them in 2008.
The Swiss League initially banned the players - Stefan Glarner, Billy Ketkeophomphone, Mario Mutsch, Pascal Feindouno, Jose Goncalves and Gabri - but back-tracked after they won a case in a local court allowing them to play.
Sion, whose fiery president Christian Constantin was once banned for attacking a match official during a brawl at a second division game, then fielded several of them in the two ties against Celtic with Guinea international Feindouno scoring twice in the return.
"I am a strong believer and deeply attached to the protection of football and fairness of the game," said Platini.
"I am happy that football disciplinary bodies are sanctioning clubs who are using their influence and wealth to induce players to breach their contracts.
"This is against all rules of sporting fairness. This is ultimately about protecting clubs, the players, and football itself."
Sion initially took the case to a tribunal in their own canton of Valais which said on Friday it could not make a ruling as UEFA is based in neighbouring Vaud.
The club then went to a tribunal in Vaud which ruled in their favour earlier on Tuesday.
"The 'superprovisional' measures were ordered by the Tribunal Cantonal de Vaud without hearing UEFA and solely based on the arguments of FC Sion," said UEFA in a statement.
"The court also thought, incorrectly, that the appeals body could not take its decision before the start of the Europa League group stage, on September 15.
"Like every other club in Europe, FC Sion had and still has every opportunity to use all possible sports arbitration mechanisms to challenge UEFA's disciplinary bodies' decisions," added UEFA.
"There is no reason why FC Sion should have special privileges compared to every other club in the UEFA Europa League to circumvent the rules which have been accepted and respected by every other club."
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