Royal Navy bomb disposal expert Robert McCann, 40, delt with the package at Strathclyde House in Glasgow in April last year.
He told the High Court in Glasgow that his colleague Lieutenant John Keenan performed a chemical test on it to see whether it contained peroxide, and it tested positive.
Trevor Muirhead, 43, and Neil McKenzie, 42, are accused of conspiring to murder Lennon, former MSP Trish Godman and lawyer Paul McBride QC, as well as various people in the premises of republican organisation Cairde na hEireann, by sending improvised explosive devices to them between March 1 and April 15 last year.
It is alleged that both accused, who deny all charges against them, believed the devices were capable of exploding.
Advocate Depute Tim Niven-Smith asked Mr McCann: “Can explosives be made with peroxide?” to which he replied: “That’s correct.”
Mr McCann, the leading diver at Northern Diving Group based at Faslane naval base in Argyll and Bute, told the court that the package had a tin inside containing a substance, and that he believed it also contained nails and a timing device.
He told the court that if an item tests positive for peroxide the team follow a protocol which includes wearing a bomb suit, carrying fire extinguishers, wearing flame-retardant gloves and a hood inside one’s helmet to offer added protection.
He said that after the package was tested, it was taken to a safe area outside and he built a small cocoon of sandbags to contain any potential explosion.
He and his colleague then used a remote-controlled vehicle to pour the liquid in the metal container into a tray to which “desensitising liquid” and fuel were added so that it could be burnt off safely, which was then done.
Mr McCann told the court he did not know what part of the package his colleague carried out the peroxide test on.
Mr Niven-Smith said: “We don’t know whether or not it is an explosive. Were the other components there to make an improvised explosive device?”
Mr McCann replied: “Not that I could see.”
Asked what was absent, he said: “An initiator,” and agreed that this was something that would initiate a reaction.
Asked what would have been the main danger if it had been capable of exploding, he said: “It would have been shrapnel. The nails would have been sent flying.”
He said that the following day he found out that the package had been addressed to Lennon at Celtic’s training ground.
The court heard that on April 15, the Royal Navy bomb disposal team were called to an address in Kilwinning, Ayrshire, to deal with a package that had been discovered by a postman. It was addressed to Paul McBride QC.
They set up a 100-metre cordon around the area and X-rayed the package.
The X-ray, which was shown to the jury, showed nails and a container with wire going into it.
Mr McCann said Mr Keenan then opened the package manually.
Muirhead and McKenzie also deny an alternative charge of conspiring to cause an explosion of a nature “likely to endanger life or cause serious injury to property”.