The concern is it would give off toxic fumes in a fire. He gave the option of switching to EMT or covering the exposed conduit with dry wall.
On the punch list he wrote the concern but never cited the code sections of the violation. When pressed he claimed these:
NFPA70
ART.352
ART.518
ART.90.4
My interpretation is 352.10F says PVC conduit is allowed and 518 is only for areas of assembly of 100 or more people.
90.4 pretty much says it is their responsibility to make interpretations of the code. So their interpretation, whether wrong or not, seems to be the rule of the land.
Edited for clarity