"It lifted the wheels up so they couldn't get traction so the back two feet of the bus were hanging over the railway line,'' Inspector John Spence said.
The driver tried several times to get the bus moving but it remained stuck on the train track, he said.
A passenger on the bus then saw the light on the track change to green, indicating a train was coming.
The seven bus passengers quickly got off the bus before it was smashed in half by the southbound freight train, Inspector Marty Edghill said.
It was fortunate no one was injured or killed in the incident, he said.
Mr Crowther said he heard "a big bang'' but thought it was just a noisy train, so he didn't get up to take a look.
"We were in bed watching TV and we just thought it was a noisy train and then half an hour later, we got out and had a look out the window and there were cops and everything there, so it was all over before the time we realised it _ and we were about 20m away.''
Mr Crowther said he understood the back of the bus got stuck in a dip, lifting up the back tyres so it could not get any traction.
"It just wiped the back of it, just gave it a hell of a crunch. And it was a new bus apparently.
"But it never dragged it or anything like that, it was just still there and the train stopped up the tracks. It must've given it one wallop and that was it.
"That's why we didn't really get up _ we just thought it was a noisy train because there was no screeching or anything like that.''
There were busy scenes outside when he eventually got out of bed and had a look from his balcony.
"Half the town were down here and half the cops and bloody fire engines, and we missed the lot.''
Mr Crowther said the crossing was not unsafe but it needed attention.
"At the busy times, with the road and rail, this whole complete crossing needs some attention,'' he said.
"We've seen lots of near misses, not just on the railway line, but road and rail.''
Inspector Marty Edghill said the seven bus passengers managed to get out of harm's way before the bus was smashed in half by a southbound freight train.
It was fortunate no one was injured or killed, he said.
It was not known whether the bus had broken down or how it had become stuck.
The accident would be investigated by the police commercial vehicle investigation unit.