That is a valid argument one could make. Another valid argument is whether or not, ignoring zoning laws, any laws concerning proper storage and disposal of chemicals were violated (the article didn't go into enough detail about that). If this guy was illegally dumping toxic chemicals into the public sewer system, then confiscating the chemicals was also warranted. While supposedly the chemicals weren't any more toxic than standard household chemicals, it's possible that the sheer volume being used and dumped could constitute a violation.

However, the fire department was certainly within their rights to call in an investigative team once discovering the chemicals and then to remove them for toxicity/flammability/etc testing. Once that testing is completed, however, and if those chemicals were shown to be relatively harmless, they should've been returned. To use my drug example, this would be akin to a police officer coming across a white powder that appears to be cocaine (even though it might just be something harmless, like talc, that the officer isn't trained to recognize at first sight) during an investigation for another incident and requesting that it be removed and tested for confirmation.

On the bright side, it appears as if this home chemist wasn't arrested or anything and is a free man while the investigation is ongoing. While I agree that the local authorities were probably overly alarmist, they did at least show some restraint by not arresting him.