File photo: Israeli soldiers gather at the Lebanon-Israel border near reported cross-border tunnels, on December 5, 2018. AFP
The Israeli army said its troops used "riot dispersal means" to turn around a Lebanese earthmover that had strayed into Israeli-held territory.
The Lebanese army said it was the Israeli "enemy" which had violated the demarcation line and fired smoke bombs at its troops escorting the bulldozer.
The demarcation line in the so-called Shebaa Farms area where the stand-off took place has been disputed by successive governments in Beirut which have argued that the area is Lebanese and should have been returned by Israel when it pulled out of the rest of south Lebanon in 2000.
Israel argues the area is part of the Golan Heights, which it captured from Syria in the Six-Day War of 1967 and later annexed in a move never recognised by the United Nations.
Following Israel's withdrawal from Lebanon, there were repeated clashes in the area between Israeli troops and fighters of Lebanese militant group Hezbollah which culminated in a devastating war in 2006, and the area remains highly militarised.
"Earlier today, (Israeli) soldiers spotted an engineering vehicle's shovel crossing the (UN-demarcated) Blue Line from Lebanon into Israeli (annexed) territory in the area of Mount Dov," where Israel maintains a military camp, the Israeli army said.
"In response... soldiers used riot dispersal means. The vehicle returned to Lebanese territory."
The Lebanese army said its troops had escorted the bulldozer, which was "removing an earth mound erected by the Israeli enemy north of the withdrawal line... in the area of Bastra - South".
After being targeted by Israeli smoke bombs, "the patrol members responded to the attack by firing tear gas at the enemy members, forcing them to withdraw".
According to Israeli media reports, the Lebanese earthmover penetrated just two metres (six and a half feet) over the demarcation line.
Sporadic incidents still occur along the demarcation line. In July, the Israeli military said it had carried out retaliatory strikes against south Lebanon after an anti-tank missile was fired from the area.