"The current release of AX is AX2012 R3 (Release 3), which incorporates Cumulative Update 7."what does that mean ?
can I separately install CU7 update for AX 2012 R3 ?
No, it wouldn’t make sense. Everything what was included in Cummulative Update 7 for AX 2012 Release 2 was incorporated to AX 2012 Release 3 before it was actually released. (It was released ~6 months after CU7.)