Luiz Felipe Scolari's men were banned from this year's tournament after their supporters aimed racial slurs at Santos goalkeeper Aranha earlier this month.
Gremio suffered a 2-0 loss in the round of 16 first leg, before a Brazilian sports tribunal unanimously voted for Gremio's exclusion.
While the verdict was partially overturned, a points deduction has effectively ended Gremio's involvement in the competition.
Santos will now meet Botafogo in the quarter-finals.
Gremio, who were also fined 54,000 Brazilian real, are four-time winners of the Copa do Brasil, but have not tasted glory since 2001.
‘Sir Gary Lineker? I don’t know how you comment on that – I’ve never even considered it. I just try to stand up for the things I believe in’ England legend tells FFT why he won’t stop raising humanitarian issues, even if it affects potential honours
'I fell on the floor and shouted for a penalty. Someone pulled me up and said, "Don’t cheat to win penalties". It was Steve McManaman. I never did it again!' Ex-Liverpool forward reveals harsh lesson he learnt from his team-mate on Reds debut
