We are using kafka for messaging and lot more stuff but now there is a requirement where we need some kind of rule-engine for data processing based on some rules. Does kafka holds any capability like this (rule-engine) or we have to use third party rule engine's (eg. https://camunda.com/dmn/ ) only and integrate with kafka.
There is no need to use a third party rule engine with Apache Kafka. As part of the project there is Kafka Streams and also to ease off a bit the need to write Java code to express rules there is ksqlDB that is based on a subset of ANSI SQL.
While these options are not necessarily a rule engine per-se; they share the same semantics which is: given an intermediate processing output the relevant result based on the computation. The difference will be in the how and not in the what. So I think they are decent replacements.
You can always integrate both as well. Several rule engines such as Drools from Red Hat are Java-based and thus; can be easily accessed from a Kafka Streams processor. As long the if-then-else rules run in the same JVM space of the Kafka Streams application you won't have any performance penalties other than a possibly bigger JVM heap.