Market officials on Wednesday discovered dozens of large toilet paper rolls at the factory of Viet Han Company Ltd in Thuong Tin District.
They were being used to replace the antibacterial layer typically used in masks, Hoang Dai Nghia, head of the Team 1 at the Hanoi Market Surveillance Department, said.
"This company is cheating consumers amid the novel coronavirus outbreak."
He added that all stock has been confiscated, and the department is considering giving the company the highest penalty.
Market authorities had earlier found and seized 140,000 masks with unclear origins, many made with toilet paper, and were looking for their manufacturers.
Industry insiders said the antibacterial layer is typically imported from China, but the Covid-19 outbreak in that country has resulted in limited supply from there.
Viet Han Company is not registered as a medical equipment producer but as a printer and napkin maker.
In the last 12 days market authorities around the country have uncovered over 4,200 violations related to mask production.
Masks have become scarce as demand surges in a country where 16 people have been infected by the new coronavirus as of Friday.
Globally, it has killed 1,489 people so far and infected 65,247.