There are no set rules on when a failsafe should stop production, it is down to opinion only and suggested times by the manufactures of the machines.
Has the auditor raised an non conformance for this finding, if so I would be inclined to appeal it should it mean you can get a higher grade...providing you can comply to the below fully.
The issue can be closed if you can show detailed control and sufficient training, control would be based in a procedure to cover all product since the last good (failsafe) check, should the failsafe engage (it is not sufficient to say 'once a failsafe engages we will have the line repaired before starting' and training for the person(s) involved in the operation of the machine who would be able to explain to the auditor that should a failsafe engage they would inform QA, eng dept and recheck every packed product from the last successful failsafe check, which could be the entire days production should the failsafe be tested at the start of the day and rechecked at the end of the day !!
Hope this makes sense