Excel Custom Function works in Excel Online but fails in Excel Desktop with “Network request failed” and no API call made

I have developed an Excel Web Add-in with a task pane and Custom Functions.

Current behavior:

• Login and authentication APIs work correctly in both Excel Online and Excel Desktop.
• The login API is called from taskpane.js and the request is visible in the Network tab.
• The authentication token is saved successfully after login.

Excel Online:

• The Custom Function formula successfully calls my backend API.
• Data is returned and populated in cells as expected.

Excel Desktop (Windows):

• The same Custom Function fails.
• The cell shows: "Error: Network request failed".
• The backend API is never hit.
• No request appears in the Network tab for the Custom Function API.
• Only taskpane.js API calls are visible in Network tab.

Technical details:

• API is HTTPS
• Domain is listed in <AppDomains> in manifest.xml
• fetch() is used inside functions.js
• Authorization header uses Bearer token
• Same API works when called from task pane

This issue occurs only in Excel Desktop and only for Custom Functions.

Question:

Is this a known limitation or restriction of Custom Functions in Excel Desktop?

Are network requests from Custom Functions blocked or sandboxed differently compared to Excel Online?

Is a proxy via the task pane or another approach required for Desktop Excel?