Edinburgh Woollen Mill is being prosecuted for mislabelling scarves as '100% cashmere'.
The retailer is owned by Edinburgh Woollen Mill group as part of an umbrella that also houses fashion retailers Peacocks and Jane Norman. It currently operates 265 high street stores and insisted in a statement that it will "vigorously defend" the case when it comes to trial on Friday.
The case comes amid broader industry-wide concerns that cashmere is being blended with cheaper wool from sheep and yak in Chinese factories.
A jumper labelled as cashmere can be bought on the high street for less than £20 which raises concern about the purity of wool - typically very expensive.
Prosecutors have brought their case against Edinburgh Woollen Mill under the textile products (labelling and fibre composition) regulations of 2012.
"We strongly refute these claims," EWM told The Sunday Times. "The cashmere products sold by Edinburgh Woollen Mill are subject to robust independent testing by experts in the fibre-testing field.
Furthermore, we conduct regular supplier audits designed to ensure the highest standards of product authenticity throughout our business."
The Cashmere and Camel Hair Manufacturers Institute said it estimated that, across the industry, at least a quarter of products were being mislabelled. It said this affected lower priced items the most.
Other industry sources claim there aren't enough goats in the world to produce the sheer volume of cashmere currently available.