Mr Wei Ying-chung, former chairman of Ting Hsin Oil and Fat Industrial Co., was found not guilty last month along with five others by a district court in central Taiwan. He could have faced a 30-year jail term if convicted.
Prosecutors have appealed the ruling, as a fresh wave of public outcry against the company surfaced with consumers boycotting its products.
"It is unacceptable that Wei was acquitted. We want Ting Hsin to close business and the government to know people's anger at its failure to ensure food safety," said Ms Monica Lo, an organiser of the protest.
Holding placards reading "destroy Ting Hsin" and "punish black-hearted toxic business", protesters marched in downtown Taipei before rallying in a square near the presidential office.
"They didn't get the punishment they deserved and they will continue to sell tainted food," said a 23-year-old protester who gave her family name as Liu.
Ting Hsin Oil is a unit of food giant Ting Hsin International Group - founded by Mr Wei and his three brothers - which owns the Master Kong instant noodle brand popular in Taiwan and China.
Mr Wei was indicted in October 2014 on charges that his company made and sold cooking oil adulterated with imported animal fat extracted from unhealthy animals.
However, the court said prosecutors failed to prove that Ting Hsin imported raw materials from Vietnam that were not suitable for human consumption or that the company's products were manufactured under unsanitary conditions.
Mr Wei was also chairman of Wei Chuan Foods Corp - also under the Ting Hsin group - which was involved in two other scandals, including selling "gutter oil" - reclaimed from used cooking oil.
The head of another Taiwan firm was given a 20-year-sentence in July for his role in a "gutter oil" scandal in which hundreds of tonnes of cakes, bread, instant noodles and dumplings had to be removed from shelves in Taiwan and Hong Kong.
Taiwan's government passed a tougher food safety law in 2013 but the public has demanded an amendment to raise jail terms and fines further.
"I am really fed up by the food scandals. The government needs to revise the law to leave no loopholes for big food companies to evade responsibilities," said college student Wang Po-chieh at the rally. - AFP
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