The industry standard alignment height for the bottom of upper cabinetry is 54" above the finished floor. The standard measurement for top of the countertop on top of your bases is 36" above the finished floor. That leaves 18" between the countertop and the bottom of the cabinet above, before any light rail is attached.

Using 42" with 96" ceiling heights theoretically means that the top cabinets butt against the ceiling. What happens in reality is that no ceiling is perfectly flat enough to have that happen without some extra prep work during the construction phase. And, if using full overlay cabinetry, the doors will sometimes scrape against the ceiling. It certainly manages to show off the unlevelness of the ceiling, which is why most Kitchen Designers avoid doing that.

The better choice is as your builder has done and leave a gap between the top of the cabinet and ceiling. It's called a shadow line and is usually seen in contemporary spaces. But, filling that gap also looks better with a more traditional type of cabinetry, and that sometimes involves scribing a molding to the out of level ceiling. That's a task for an expert finish carpenter or a professional cabinet installer.

I personally prefer to leave a larger, more deliberate gap at the top, and fill that with a more substantial molding. It allows easier scribing, and offers a finishing touch to the cabinets.

The issue with having the space between your countertops and the bottom of the wall cabinets less than 18" is that many building inspectors (at least in MA) won't allow that. The appliance (range) specifications show minimum distance to combustible surfaces, and 18 is usually the bare minimum (including any light rail moulding. Given what you've got now, I would have gone with 36" or 39" upper cabinets, hung them at 54" off the floor then added the type of moulding that ProSource mentions above.

the building inspector passed my cabinets - the microwave is above the stove with plenty of distance. my builder is not filling in the gap - they want to leave that for me to do, which I wasnt happy about, but had some ideals as to what I would do in that area. My issue is on my plans they clearly show 17 1/4" between the bottom cabinets and top cabinet - edge and only gave me 16". That is something I looked at when I got my plans, to make sure my appliances would fit (mixer) at 16" my mixer will not fit. So I want to verify that to properly measure - it is from cabinet to cabinet not cabinet to under cabinet.

before selecting the cabinets - I worked with the builders staff - told them I want cabinets to ceiling and why - told them how much minimum space I needed under the cabinets etc etc. I dont really care if ceilings are even or not - that was not my problem - that was their problem. They should have addressed that in the planning stages - not end stage.

The industry standard measurements are not from cabinet to cabinet for a very good reason. Ceilings and floors are not level, even in new construction. The measurements are always from the tallest point of the finished floor height to a level line from that measurement. Most manufacturers do not recommend using a 42" wall cabinet with 96" ceilings. The tallest they recommend is 39". Because no matter how new the construction, there will always be a tall spot in the floor, and a low spot in the ceiling. If you have your specifications in writing, then they should remake your upper cabinets shorter and install them with the standard 18" between the counter and bottom of upper.

Look - they were able to take my cabinets to the ceiling on the side with the fridge - so why wouldnt they do that on the side with the stove - which would give me the 17" plus (please note I keep saying 17" not 18") that is in my home plans that they provided to me. instead they put over a 1" gap and take my space to 16" - I am well aware of what the norms are for cab heights - the "custom" home builder only offers 2 cab. sizes - I addressed my concerns before selecting and paying for them. they said no problem.