Taiwan’s government on Thursday ordered a Taiwanese company to cease operations after it was found to have repackaged over three million non-medical grade masks imported from China, labeling them as domestically-manufactured masks.

On Wednesday, pharmacies in the city of New Taipei reported that “after receiving their latest shipment of what should have been Taiwan-made masks for the government’s real-name rationing system, they also received masks with labeling in the simplified Chinese script used in China, indicating they were made by a company in [eastern China’s] Anhui Province,” Taiwan News reported on Friday.

The pharmacies reported the finding to the New Taipei City Pharmacists Association, which then notified Taiwan’s Food and Drug Administration (FDA), the director of the FDA’s Division of Quality Compliance and Management, Chih Lan-hui, said at a press conference on Thursday.

According to Channel News Asia (CNA), the FDA’s discovery of fraud within the Taiwanese company, known as Carry Mask, “is particularly sensitive” because it was a member of Taiwan’s “National Face Mask Team” of private-sector manufacturers contracted by the government to produce sanitary masks “as COVID-19 [Chinese coronavirus] began to spread from China earlier this year.”

Chih said that the FDA, Taiwan’s Ministry of Justice, and the New Taipei City Department of Health sent teams to conduct an audit of Carry Mask’s factory on Wednesday night following the reports of fraud.

According to CNA, “The investigation revealed that the company had imported some 3.37 million non-medical grade surgical face masks from China during the month of August, then relabeled and repackaged them for use in the government’s surgical face mask ration program.”

Chih said that “evidence found at the factory included customs declarations, quantities of the Chinese masks labeled as non-medical grade and for one-time use, and packages of the same masks on which the Carry Mask logo had already been embossed.”

The New Taipei City Pharmacists Association estimated that roughly “one-third of the city’s 1,100 pharmacies, more than 300, received the counterfeit masks.” Following the investigation, the FDA ordered Carry Mask to immediately halt all production and shipments.

At Thursday’s press conference, Chih encouraged anyone who had received the Chinese masks, which were “embossed with the English words ‘Carry Mask’ on them,” to return them from September 4-11 at pharmacies and clinics run by Taiwan’s National Health Insurance system.

Manufacturers “found engaging in such illegal behavior” as Carry Mask will be ordered to halt operations and will “face fines of between NT$30,000 ($1,021) and NT$2 million [$68,181] under the Pharmaceutical Affairs Act,” according to the FDA.

Responding to news of the Carry Mask fraud, Taiwan’s Economics Minister, Wang Mei-hua, said on Thursday that “the government had eased the terms of its mask requisitioning order in June,” but had “still closely monitored and kept statistics on all mask-related imports and exports,” according to CNA.

“A large portion of [the imported masks] entering Taiwan were indeed from China,” Wang confirmed, adding that “the company in question [Carry Mask] was one of those that imported them.”

Taiwan’s government began requisitioning domestic manufacturers to produce sanitary masks on January 31. The government later launched a national mask rationing program on February 6. The efforts were credited with boosting Taiwan’s daily mask production capacity from 1.88 million to 20 million, according to the report.