The Masters' Ceremonial Sparring, as its name states, is a ceremonial sparring between Kung Fu masters. The exact purpose for it is unknown. It was first seen in the Kung Fu Panda: Legends of Awesomeness episode "Sight for Sore Eyes", where masters Junjie, Chao, and Shifu performed the ceremony during the annual "check-up" of the Jade Palace and its caretaker, Master Shifu.
The Ceremonial Sparring is one of many rituals performed during the check-up, and is often considered dangerous due to the extent and raw power of each Master's Kung Fu abilities. Due to the extreme nature of these sparring matches, particularly the techniques employed, students are forbidden to witness the event.
Po deeply wished to witness the event, but the dangerous nature of the sparring caused Shifu to refuse the panda. However, Junjie suggested to Po that he watch anyway in secret, as part of his secret plot to become master of the Jade Palace. That evening, the three masters performed the Ceremonial Sparring in the Hall of Warriors, while Po watched in awe through a crack in the doors conveniently left open by Junjie. During the sparring between Shifu and Junjie, Junjie's hatred for Shifu caused the fight to become heated, up to the point where the fox performed the highly dangerous Golden Lotus Clap technique. Shifu and Chao looked away just in time, while Po was blinded. Chao scolded Junjie for his actions afterward.
Po's blindness led to Chao blaming Shifu for the panda's disobedience when the incident was discovered. Shifu was then stripped of his title and replaced by Junjie, just as the fox had planned. However, Junjie's plot was eventually discovered and he and his students were defeated and sent to Chorh-Gom Prison.