Lieutenant Michael Devaney told Donegal Circuit Court that he and other officers from the LE Roisin boarded the Dutch vessel, Annelies Ilena on the 22nd November 2013.
The 144-metre, 14,000 tonne Annelies Ilena was formerly known as the Atlantic Dawn when it operated out of Killlybegs.
Lieut Devaney told Judge John O’Hagan and a jury of six men and six women that he saw seagulls following the vessel, retrieving fish from the rear of the trawler.
When the vessel was boarded, he said, there was evidence that a grading machine was in the production room and fish was being discarded.
The vessel was detained off Tory Island and taken to Killybegs.
Gerrit Plug, 58, a Dutch national who is skipper of the Annelies Ilena, has pleaded not guilty to five charges.
The offences include discarding species of fish which are subject to quota, failing to record discards and having illegal equipment on board.
The prosecution maintains that Mr Plug high-graded the catch by discarding fish, known as horse-mackerel or scads, and retaining larger fish to increase the value of the catch.
The trial continues.