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Coexistence of localized and extended excitations is central to the macroscopic properties of correlated materials. For 5d transition metal compounds, electron correlations alone generally do not lead to a metal-insulator (Mott) transition, with insulating behavior usually resulting from their coupling with magnetic ordering and/or structural distortions. 1$T$-TaS$_2$ is a prototypical example of such correlated insulating behavior, with a high-symmetry metallic phase transforming into a distorted, charge density wave (CDW) insulating state at low temperatures. The relevance of the localized electron physics at play in 3d compounds to these 5d transition metal compounds remains an open question. We resolved this standing controversy in 1$T$-TaS$_2$ combining resonant inelastic X-ray spectroscopy and first-principles calculations. We observed five electronic excitations arising from the interband transitions of the Ta 5d orbitals and the S 3p ligand state, with none of the excitations on the order of the Mott gap. These excitations cannot be explained within the framework of standard multiplet calculations that assume a localized wavefunction, but instead, are captured by a band theory framework accounting for the low symmetry of the crystal field in the CDW state. Our findings suggest that the electronic property of 1$T$-TaS$_2$ is dominated by both plasmonic quasiparticles and inter-band transitions associated with a Drude-type response, with no resonance associated with a putative Mott transition. Our discovery provides new insights into the electron localization and the onset of insulating behavior in 5d transition metal materials.