Preheat oven to 350F degrees and flour a 10 inch bundt pan. Beat cake mix, dry pudding mix, water, eggs and oil in large bowl on low speed until blended. Beat on high speed for 2 minutes. Gently stir in the apples. Pour into pan.
Bake for 50 minutes or until toothpick inserted in cake comes out clean.Cool 20 minutes then remove from pan and cool completely on a wire rack.
Microwave caramels and milk in microwavable bowl on HIGH for 1-1/2 minutes, stirring every 30 seconds (so it doesn't burn)until blended. Cool 10 minutes until thickened slightly. Drizzle over cake.