Martin Palmer, who supplies the Savers Xtra store in Bargoed, near Caerphilly, South Wales, said the "bong" smoking tools had always been legal in Britain.
"The policeman went into the store and told the shopkeeper what he was selling illegal," said Mr Palmer, a 52 year-old company director.
"He quoted a law and gave him a piece of paper with the relevant clause on it.
"But he phoned me up asking for advice - and I've been doing this for 25 years so I knew it was OK."
Mr Palmer, of wholesalers Avalon based in Portsmouth, Hants, added: "So I searched the act and this section on google and found that it was a law in New South Wales in Australia."
The PC showed a document titled "Misuse of Drugs and Trafficking Act 1985" and drew the shop keeper's attention to Section 11A.
It states: "It is an offence to sell, supply or display for sale a bong or ice pipe, or the component parts of a bong or pipe, whether or not the bong or pipe was intended to be used to administer a prohibited drug."
The legal crackdown in Australia was introduced to deter people from using the equipment for smoking cannabis instead of tobacco. It is not outlawed in Britain.
Police in Gwent, South Wales, apologised to the shopkeeper.
A spokesman said: "The officer in question was acting in good faith but on this occasion we got it wrong.
"The local inspector has visited the shopkeeper and apologised personally for the confusion and any distress caused."