Indian and Chinese troops had come face to face in Chumar area of Ladakh in July when the latter transgressed into Indian territory along the Line of Actual Control.
Army sources said after the two sides came face to face in Chumar -- which is northeast of Leh in Jammu and Kashmir -- they both showed banners as per the agreed drills and returned to their respective positions peacefully.
As per the banner drills, when both sides see each others' troops in their side of the perceived LAC, they show big flags on the transgression and the need to go back from their positions.
They said the situation was peaceful and dismissed reports about tension between the two sides on the issue.
Chinese Defence Minister General Liang Guanglie had earlier in September visited India, where the two sides agreed to enhance peace and tranquility along the borders.
India has stated that the Chinese Army has transgressed the Sino-India border more than 500 times in the last two years.
Minister of State for Home Mullappally Ramachandran had informed Parliament that there were 228 cases of transgression of Indo-China border by the People's Liberation Army in 2010, 213 cases in 2011 and 64 cases till April 2012.
"There are cases of transgression due to the perception of the Line of Actual Control," he had said.
In July 2009, Chinese troops had entered nearly 1.5 km into Indian territory near Mount Gya, recognised as the international border by India and China, and painted the boulders and rocks with red spray paint.