Neo-Nazi Nathan Bull represented himself in the first of a two-day contested hearing in the Melbourne Magistrates Court on Monday.
He is charged with performing a prohibited salute in a Carlton cinema in March, 2024 and has pleaded not guilty.
Police prosecutor Jessica McCartney said the prosecution case would centre on CCTV, seating maps, footage of the group leaving the theatre and witness accounts.
Witness Daphne Mohajer Va Pesaran said the film Zone of Interest focused on a concentration camp manager's mundane life, set against the horror occurring nearby.
She said she noticed a rowdy group of five when they first entered the small cinema and thought they might have been drunk.
But as the movie began, she said she realised they may have had another reason to be there rather than enjoy the movie.
"I was surprised by their response to the content of the film," Ms Mohajer Va Pesaran told magistrate Stella Stuthridge.
She described a poignant film scene where a Nazi child appeared, prompting one group member to yell "that's me."
In another scene depicting human loss, the group "laughed and snickered".
"It was a very heavy film and they were bopping their heads like they were enjoying it and that was surprising," Ms Mohajer Va Pesaran said.
"It felt like they were excited to be there, they were egging each other on and announced to the cinema that we'd been lied to, that the Holocaust didn't happen."
She said the group, seated in the front row, stood up and announced to the audience that "Hitler was a great guy" and "he didn't do anything wrong".
Despite being upset by their commentary, Ms Mohajer Va Pesaran said she did not see anyone perform a Nazi salute.
Another witness Richard Schultz said he saw two members of the group, made up of four men and one woman, perform a Nazi salute in the cinema.
Before performing the salute, Mr Schultz said the group had become a nuisance talking loudly throughout the film and yelling out.
When the film ended Mr Schultz said the group again called out telling others in the cinema that the Holocaust "didn't happen" and they need to "chill out".
Then, he said, one of them performed a Nazi salute.
Another member of the group followed suit, according to Mr Schultz.
In cross-examination, Bull dressed in a navy blue Helly Hansen polo with a black fanny pack strapped to his chest, questioned Mr Schultz's memory given he couldn't remember the name of the film or how many people were in the group.
Supported by two men in court, Bull sporting a braided mohawk, at times covered his mouth in an attempt to hide a smile during witness statements.
The hearing continues.
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