The witness named Salem as an associate of Dawood Ibrahim in the special Terrorist and Disruptive Activities (Prevention) Act court trying the gangster and two others in the case, Riyaz Siddique and Abdul Qayum.
The witness became the first to testify against Salem in the first trial to commence against the gangster, who was extradited by Portugal in 2005.
The witness, whose identity may not be revealed, said Siddique drove a Maruti van to Buruj in Gujarat with a specially made cavity in it to store arms and ammunition. The witness said the car was taken to Gujarat for Salem.
The second witness had accompanied Siddique to Buruj. The witness told the court he knew Siddique since 1989 as an associate of underworld don Dawood Ibrahim and his brother Anees, who used to carry out smuggling activities.
The witness said he knew Siddique because of his friend, a man called Shaukhat who worked for Siddique.
The witness said in January 1993 Sidique came to his place in Mahim in the Maruti van and asked him to accompany him to Buruj, only saying they had to transport some goods. He agreed and during the journey he was informed about the special cavity in the car, which had to be left at Buruj for a man he learnt was called Abu Salem, an associate of Dawood. The witness said he was told Salem would use the car to store and later transport the arms and ammunition to the city. The arms and ammunition were meant for distribution among co-accused, now already convicted, for use in terrorist acts.
Salem, Siddique and Qayum are charged with conspiracy to commit terrorist acts and transportation and distribution of arms and ammunition.
The prosecution is likely to examine around 16 witnesses during the trial, which began last week. The third witness, an immigration officer who was on duty when Salem was extradited, is to depose before the court on Thursday.
Salem was extradited in November 2005 by the European country for trial in nine cases, though he was named an absconder in over 50 cases.