Commemorating the Prophet’s birthday is a great opportunity for renewing our love for the Prophet and spreading his message, and Muslims all over the world have to make the best use of it. We all have to learn the biography of Prophet Muhammad (peace and blessings be upon him) to know his noble character. We have to create new means and use the media to spread his message, provided that we avoid all forms of excessive reverence, which is prohibited by the Prophet himself. He is reported to have said, “Do not exaggerate in praising me as the Christians praised the son of Maryam, for I am only a Servant. So, call me the Servant of Allah and His Messenger.” (Al-Bukhari)
For more and better clarification on this, Sheikh Ahmad Kutty, an Islamic scholar stated,
The fact that the sahabah and tabi`un did not do so does not mean we are not allowed to do that, as long as we do so for the pure maslahah (public good) of using the opportunity to disseminate the Prophet’s message and educate people as to his great examples.
Although we are not allowed to innovate acts of worship in Islam, we are certainly allowed to introduce customs to promote the maslahah, as long as there is no prohibition in the sharia.
See how even Muslims today commemorate events in the history of their nations, such as the silver and gold anniversaries, etc., so can there be anything that is worth commemorating for Muslims more than the arrival of the Prophet of Mercy?
Didn’t the sahabah commemorate the Prophet’s arrival in Madinah through great fanfare? Didn’t Caliph `Umar ibn Al-Khattab commemorate the Prophet’s Hijrah by marking the Islamic calendar with it?
So, there is nothing wrong about commemorating the month of Rabi` Awwal for the purpose of educating people as to the Prophet’s life and examples. There is nothing in the principles of sharia that condemns this practice, as long as we shun all forms of shirk (associating partners with Allah) and excessive veneration.