A Kiwi dairy company has been busted for falsely claiming its products were "100 percent pure New Zealand", despite using butter imported from India.

Dairy firm Milkio Foods Limited was fined US$261,452 on Monday after New Zealand's Commerce Commission took it to court for making false claims about the origin of its butter products.

The Hamilton-based firm misled customers about where its ghee products came from, with "claims like '100% Pure New Zealand' despite importing the core ingredient from India", the Commerce Commission said in a statement.

New Zealand's agriculture-driven industry prides itself on high-quality dairy exports, with overseas customers hungry for milk and butter from its rich pastures.

"Milkio took advantage of this reputation to promote their own products" Commerce Commission spokesperson Vanessa Horne said.

The company also presented false and incomplete information to get approval to use the FernMark logo -- a trusted symbol to identify New Zealand-made products.

Milkio pleaded guilty to 15 breaches of New Zealand's Fair Trading Act for making false representations and admitted using the FernMark logo and licence number without proper authorisation.

"This conviction should serve as a warning to others who may be looking to falsely claim the New Zealand brand," Horne added.