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Survellance for a while. Give your NPC's Skills, and roll them randomly. They will eventually kill this creature, but they will first see if they can use it to their advantage.

After all (as someone noted in a previous thread)...this character may give the CS the "legal" reason to invade Kingsdale. After all, here is prime proof they are harboring dangerous runaways and teaching them magic, teaching magic to creatures who may have an indepth knowledge of the CS world, and will use it to enslave them or worse, devour their soul.v

Then...they would send a small covert opt group to quietly make this creature disappear.

I would say surveillance. On quick inspection at a distance, a CS spy isn't going to be certain that cat-like humanoid is a runaway mutant animal (or a freeborn descendant of same); it might be a feline D-Bee of some sort, or even a Raksasha demon. Sure, both of those things are targeted by the CS, but not in the same, purposeful manner when not in CS territory as runaways.

Just checked out the description of the battle cat, and kingsdale (I'm not too familiar with rifts FYI)

I concur with Killgore (and that's the second time in three weeks I've done that). As far as any observer can tell, it's just a mutant Cat, possibly no more distinct than any other mutant feline spotted. Its magic and its distance from lone star make it unlikely that a CS spy would be able to make it for what it is.

Batts

The CS isn't omniscient, and I'd imagine quite a few persons wear robes who aren't magically inclined. In fact, the hooded robe would likely be the exact thing an escaped Lone Star mutant animal would wear as a disguise.
It's up to you, naturally, but I would have the CS treat the Battle Cat just like they would any other runaway they really don't care about, unless and until the battle cat uses magic in public that can't be discounted as psionics.