What the teacher should say depends on what the formula is. If the formula ignores empty cells, then the teacher can say "I won't grade it". If, on the other hand, the formula treats empty cells as if they contained the value 0, then the teacher should not say "I won't grade it", but should instead say "I will assign it a grade of 0".

"Grading" means "scoring"; it does not refer to a specific ritual performed by the teacher to arrive at the score. What if the teacher decided to score each student's paper by means of a random process, such as rolling dice? Would you say that the teacher "did not grade" the papers, or would you say (as I would insist) that the teacher graded the papers in an unfair manner?

Furthermore, whatever the semantics of the verb "grade", it is the impact on the student's score, and not the teacher's behavior, that is relevant, and consequently it is to the former that the teacher should be referring. (Indeed, the reality is that that is the intended referent, and the teacher is simply referring to his/her own behavior as an oblique, implicit way of referring to the impact on the student's score. I object to such an oblique way of speaking.)

I honestly don't understand the resistance to conceding me this point. I can perhaps understand if people aren't as bothered by this kind of thing as I am, but...why the need to actually defend what is clearly less-than-maximally-considered language? Do people really not understand where I'm coming from here? In this, a place where I thought sympathy for logical precision mixed with skepticism of institutionalized education? Exactly what mistake do you think I'm making, all ye hordes-of-orthonormal-upvoters? Or is your apparent disagreement just a way of signaling disapproval of my having made the complaint (as I am inclined to suspect)?