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Indian or American? A question of citizenship

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Should an Indian citizen pay fines for traveling using his/her Indian passport? When a parent or parents got US citizenship, and the minor child is in India, will he/she lose the Indian citizenship automatically?
Dallas, Texas native J John is facing a curious situation. She became a US citizen in 2011. Her minor daughter was in India at that time, who came later to the US with her Indian passport.
In 2013, her daughter took US citizenship. Recently she applied for a ten year Indian visa for the child at the Indian Consulate in Houston.
She paid $605 with the outsourcing agency CKGS including $175 for renunciation fee and $250 as penalty for the delay in renouncing the Indian citizenship. With that the CKGS found the paper work in order.
While John was waiting for the visa to arrive, a consulate official called her demanding additional fines. The official said the child had traveled after the mother took up US citizenship. For each travel the consulate assessed $250 totaling $750.
John pointed out that the child did not travel to India after taking the US citizenship. The earlier travel was using the Indian passport and the child never renounced the Indian citizenship, though the mother became a US citizen. The child’s father is still an Indian citizen.
As per her request, the consulate sent her a break up of the fees. It says that a penalty of $250 should be paid for the initial travel to the US, even though the child came with Indian passport. (Dep Cochin on 15.10.2011: US$ 250)
For the travels in 2012, a fine of $500 was imposed. (Arr Cochin on 26.07.2012: US$ 250; Dep Cochin on 10.10.2012: US$250)
When contacted the consulate the reply was that ‘It seems our officer had directly written to applicant mentioning each detail with dates. Travel penalty is applicable in this case in accordance with extant rules.’
The US law allows the minor children under 18 to become US citizens automatically when a parent or parents become US citizens. But if the parents do not want US citizenship for their children, is there any provision for that?
Another question is if one parent becomes US citizen and another parent remains Indian, what will be the citizenship of the minor children?
In any case how is citizenship defined? In this case, the child was in India and traveled with her Indian passport. In such a situation, how can the child be considered a US citizen?
In cases where the parents became US citizens, the minor children in the US would become US citizens automatically, according to the US Customs and Immigration Service (USCIS.)
Even then they will not be getting any US citizen benefits automatically. For this, the parents need to apply for US passport for the children. If the parents would not do anything, the children’s status remain the same, according to experts.
Indian officials say that US citizenship for minor children is automatic with the parents citizenship. But if only one parent becomes the US citizen, what will the citizenship of the minor childfren?
In any case, this part of the legal situation needs additional explanation from the Indian officials.