The Chinese Food and Drug Administration (CFDA) said on Tuesday that two batches of the milk powder had been found to contain docosahexaenoic acid (DHA) produced in October 2015, with an expiration date of 11 April 2017.
The company had also altered the DHA levels in nine of its infant food products, flouting the law in all nine instances.
The CFDA further revealed that the manufacturer had other milk products containing expired ingredients, but they were seized before they managed to reach stores.
Huo Junsheng, a researcher from the Chinese Center for Disease Control and Prevention's National Institute for Nutrition and Health, said, "The strictest supervision should be carried out to create a safe infant milk formula market environment, since this is not the first scandal involving baby milk powder."
Not just formula
In addition to expired DHA, Xinjiang Western Animal Husbandry was found to have substituted refined grape seed oil with soybean oil and refined corn oil, and granulated white sugar with lactose in its products.
Huo said that in order to deter manufacturers from violating the rules and effectively punish those that do, the harshest possible penalties should be imposed and a stringent accountability system put in place.
"Frustrated by food safety scandals over the past few years, many Chinese consumers have lost faith in the domestic food quality and opted for Western infant formula suppliers in search of reliable and delicious alternatives for their children," said Li Shengli, a professor at China Agricultural University's College of Animal Science and Technology, who also warned about Chinese companies losing their market share should they fail to adhere to regulations.
China has a history of domestic food safety scandals: in 2008, melamine-tainted infant formula killed six infants and caused 300,000 others to fall ill.
This has been a major reason for Chinese authorities introducing stricter laws in recent years, including more stringent regulations for infant formula manufacturers.
Many Chinese parents also strongly favour overseas formula brands, and are the world's top spenders on infant nutrition.