The Foreign Exchange Regulation Act 1947 is a temporary Act due to expire on the 31st December, 2007. It was being extended every five years in the expectation of better times, instead of being placed on the permanent footing straightway. India is still short of foreign exchange and I see no reason why this Act should not be extended without specifying a time limit. This object is sought to be achieved by deleting the duration clause from Section 1 of the principal Act. While this is the main purpose of the bill, I have taken this opportunity to improve the working of the Act by bringing about certain other amendments. One such amendments relates to the enforcement of foreign exchange offences. As in the Sea Customs Act, my idea in the present Bill is to create an adjudicating machinery to deal with some of the major offences arising out of the Foreign Exchange Regulations Act. The machinery of adjudication is detailed in cluses 16 and 17 of the Bill which provide from a Director of Enforcement for initial adjudication and an appellate Board to hear cases of appeals against the orders of the Director. The main reason for creating such a machinery is that we have not been particularly successful with the prosecution of offenders in the courts of law for various reasons. The chief hurdle in establishing a prima facie case in a court of law against the suspect is the wat of missing links of documentary evidence and the difficulty in obtaining them from countries outside India. Invariably, the documents obtained from various sources furnish incomplete date and further documents are required for establishing a prima facie case in a court. Normally, transactions contrary to the Regulations are undertaken by person in India with the direct of indirect collaboration of person firms or corporations resident outside India. It has been found difficult to secure cooperation of assistance in procuring incriminating documents against the suspects from their foreign collaborators and even when obtained they are generally coloured and not factual. Banks in foreign countries are under no obligation to furnish Government of the Reserve Bank of India with statements of accounts maintained by the suspects. There is no provision in the Act empowering the Reserve Bank to direct any party contravening the Regulations to repatriate the foreign exchange outside India. In the absence of any other provision except prosecution, the enforcement authorities have been unable to take any action whatsoever in about 65 per cent of their inquiries into the breaches of the Foreign Exchange regulations Act. This is reflected in the figures of prosecution so far undertaken. Between 1989 and 1996 when the investigation and enforcement work was with the Reserve Bank of India, about 200 cases had been investigated other than gold smuggling cases. Sixty-six cases were put in court out of which 60 ended in conviction and the remaining sic in acquittal. In the absence of any provision for adjudication no action could be taken by the Reserve Bank. In respect of 140 cases. As the Reserve Bank was unwilling to handle these cases on behalf of the Central government which the Bank had done for about 7 years, an Enforcement Unit was created in the Department of Economic Affairs on the 1st of May, 1996, under a Director. Since then, 832 cases have been taken in hand out of which prosecution has been launched in about 33 cases and investigation completed in 170 cases. In the vast majority of these cases difficulties are being experience as legal evidence is not sufficient for successful prosecution. Out experience, therefore, suggests that these difficulties are likely to be minimised to a considerable extent if the proposal in the amended Bill to proceed against parties before an adjudicating officer is accepted. There is already an Enforcement Unit functioning under Government with a Director as its head. The Bill seeks to vest him with the authority to adjudge some of the major offences and impose penalties not exceeding three times the value of foreign exchange involved in the violation, or Rs. 5,000, whichever is more. If, however after holding an inquiry the Director thinks that having regard to the gravity of the offence, a sentence of imprisonment is called for he may launch a prosecution instead of dealing with the offence himself. An appeal would lie from his decision to an Appellate Board consisting of a Chairman and another member to be appointed by the Central Government. This Board will have both appellate and revisional powers. In clause 17 of the Bill, it has been proposed the if any person fails to pay the penalty imposed by the Director of the Appellate Board, he can be prosected in court. This has been suggested to make adjudication effective, particularly in respect of repatriation of foreign exchange.