I am working with MS Excel files in my web application built in Azure environment. I never run into following error when I am trying to access the excel file on my developme
The development fabric is as close an approximation of what you get on the cloud, without having to run a virtual machine on your development machine.
When you run code in the development fabric it has access to all of the components that are installed on your machine. The machine that your code runs on in the cloud only has a very minimal install on it. It's more or less a clean install of Windows Server 2008 (IIS will be running if it's a web role).
Any code that you deploy to Azure needs to be able to run if all you did was build the project, copy the build files to a new machine and run it. As such if this component you're trying to use is just a .Net assembly, change the reference so that it has "Copy Local" set to true and this should work. If to get your code to work requires you to actually install something, I'd look for a different way of doing things.