The account was given on the first day of a fatal accident inquiry (FAI) almost five years after the Super Puma plunged into the water off the Aberdeenshire coast.
Lidvar Olav Hildre, a ship's mechanic, was painting a railing on board the Normand Aurora, a platform supply boat sailing to Norway.
He heard a helicopter making a "normal buzzing noise" above the ship.
"Apart from the helicopter noise I didn't hear anything else - then suddenly there was silence," he said in a statement to police which was read out at the inquiry in Aberdeen.
"This made me look into the air, as this was unusual, and I saw on the starboard side of us an oblong shape falling like a torpedo towards the sea."
The weather was good with clear conditions and a calm sea, he said.
"The object was obviously a helicopter but I couldn't believe what I was seeing.
"It fell silently towards the sea. I don't think there was any smoke or anything coming from the helicopter at that point.
"Just before the helicopter hit the sea, or just as the helicopter hit the sea, I cannot be sure which, I saw one flame come from the helicopter. I couldn't say exactly where on the helicopter this came from.
"There was then a big splash as the helicopter hit the sea in a bang, then there was white smoke.
"After this I then saw, quite clearly, four large black rotor blades all attached together falling out of the sky towards the sea, separate from the helicopter.
"The rotor probably hit the sea around the same place as the helicopter but I never saw it hit."
He heard a bigger bang as he ran to report what he saw to his superiors, who prepared to launch a fast boat.
Debris was spread in pieces around an area about 100 metres in diameter.
Details of the search were relayed to him on board the Normand Aurora.
Eight bodies were on the surface, tied together by rescuers to prevent them floating away.
As the only eyewitness account was read out, family members in the public gallery sat silently, some wiping tears from their eyes.
Fourteen oil workers and two crew were killed when the aircraft hit the sea on April 1 2009.
Many of them worked for KCA Deutag Drilling and were returning from BP's Miller platform when the helicopter's main rotor gearbox suffered a ''catastrophic failure''.
The inquiry, expected to last about six weeks, will examine the circumstances of the crash in order to prevent any future tragedy.
Mr Hildre's statement was read out to the inquiry by Fiscal Depute Geoffrey Main, appearing for the Crown before Sheriff Principal Derek Pyle.
The inquiry - sitting at the Town House in Aberdeen - began with a roll call of all 16 victims, with their names, occupations and some personal details read out.
Some of the victims' families have expressed anger that there has been no criminal prosecution following the crash.
Lorraine Doyle, father of 57-year-old Raymond Doyle from Cumbernauld, Lanarkshire, said she was "sickened" by the decision by the Crown Office and Procurator Fiscal Service.
A report by the Air Accidents Investigation Branch (AAIB) said that the gearbox failure caused the main rotor on the AS332-L2 model to break away and its ''tail boom'' got severed from the fuselage.
The crash happened just six weeks after a Super Puma EC225 ditched as it approached a production platform owned by BP. All 18 people on board survived this accident.
In May last year the same model of helicopter, destined for an oil platform, went down about 30 miles off the coast of Aberdeen and its 14 passengers and crew had to be rescued.
Five months later another EC225 carrying an oil crew from Aberdeen to a rig 86 miles north-west of Shetland was forced to ditch. The 17 passengers and two crew were rescued from life rafts by a passing boat.
New advice on checks for the EC225 model were issued following the accidents.
Four oil workers were killed when their Super Puma L2 plunged into the sea off Shetland on August 23 this year. Fourteen people survived.
In the 2009 crash, captain and co-pilot Paul Burnham, 31, from Methlick in Aberdeenshire, and Richard Menzies, 24, from Droitwich Spa in Worcestershire, were killed along with Mr Doyle and 13 other workers.
Five men from Aberdeen died: Alex Dallas, 62, James Costello, 24, Stuart Wood, 27, Vernon Elrick, 41, and Brian Barkley, 30. Two workers were from Aberdeenshire: Leslie Taylor, 41, from Kintore, and Warren Mitchell, 38, from Oldmeldrum.
The other victims were David Rae, 63, from Dumfries; Gareth Hughes, 53, from Angus; Nairn Ferrier, 40, from Dundee; James Edwards, 33, from Liverpool; Nolan Goble, 34, from Norwich; and Mihails Zuravskis, 39, from Latvia.
The first witness called in the FAI was Malcolm Paterson, 29, a Bond Offshore Helicopters mechanic who worked on the aircraft before it left on its final journey.
He explained the process and said nothing unusual was noted by anyone involved before it was signed off.
Pilot Andrew Miller, who flew the same helicopter on its last completed journey, said there were some "minor" problems but nothing to explain the catastrophic crash.
Asked if there was anything out of the ordinary, Mr Miller, 47, who is ex-RAF, said: "No, well yes, but only if you might say minorally unusual."
The ice detector was not working, he told the inquiry.
"Because of the weather conditions at the time, that wasn't going to prevent the flight I had to carry out or the subsequent one because the weather was so good," he said.
The helicopter was forced to fly at 4,000 feet - twice the expected altitude - on the return leg of his flight from Aberdeen to the Bruce platform.
The aircraft was handed over to the new crew while the rotors were running, a situation described as not unusual.
A "joint minute of agreement" setting out the known background to the tragedy was accepted by the Crown and counsels representing all parties involved in the inquiry.
It set out the details of what happened in the run up to the crash, noting that nothing appeared to give cause for concern.
The statement, which contained the eyewitness account, described that fuel samples were taken and cleared on the Miller platform.
Charles Cronan, the deck foreman helicopter landing officer, carried out a visual inspection.
"The passengers then boarded the helicopter for the return flight, with all being described as in good form, laughing, joking and shaking hands with Cronan," the statement reads.
Standard procedures were followed, including a hover at 10 feet to make sure everything is okay.
Pilot Paul Burnham reported "nil defects".
"The sound of the helicopter going into the distance was completely normal," the statement continued.
Trouble emerged at 1.55pm on the day of the crash. Michael Paddon, an air traffic controller at Aberdeen Airport, heard an expletive on the radio followed by repeated Mayday calls. The on-screen information soon disappeared from his monitor.
Offshore union the RMT used the first day of the inquiry to repeat its call for a full public inquiry into helicopter safety.
General Secretary Bob Crow said: "The FAI process has been proven to be far too slow and since the 2009 disaster that is under investigation today there have been three further incidents, one of them fatal, and the families and colleagues of all those whose lives have been impacted by the helicopter safety issue have waited far too long for justice.
"Unfortunately, The FAI cannot deliver that justice and once again we call on the First Minister, Alex Salmond, to throw his weight behind the RMT campaign for a full public inquiry into the whole subject of helicopter safety and the broader issue of working conditions in the offshore industry."
The call is supported by an aviation law team from representing victims and families in some of the recent crashes.
Jim Morris, a former RAF pilot and partner in the Irwin Mitchell team, said: "Too many innocent people have lost their lives or suffered life-changing injuries as a result of the helicopter crashes since 2009 and through our work on behalf of victims, we have seen how desperate they are for reassurances that no one else will suffer in the same way."