"There is a cat under the hat."
Translation:Il y a un chat sous le chapeau.
"C'est" is "it is", not "there is". If someone asked you "what's going on?" You wouldn't answer "it is a cat under the hat". You would say "there is a cat under the hat".
Hope that helps!
Or another way of saying it, "C'est" is talking about the description of an object and "Il y a" is talking about the location of an object.