  High-energy neutrinos are detected by the IceCube Observatory in the
direction of NGC 1068, the archetypical type II Seyfert galaxy. The neutrino
flux, surprisingly, is more than an order of magnitude higher than the
$\gamma$-ray upper limits at measured TeV energy, posing tight constraints on
the physical conditions of a neutrino production site. We report an analysis of
the sub-millimeter, mid-infrared, and ultraviolet observations of the central
$50$ pc of NGC 1068 and suggest that the inner dusty torus and the region where
the jet interacts with the surrounding interstellar medium (ISM) may be a
potential neutrino production site. Based on radiation and magnetic field
properties derived from observations, we calculate the electromagnetic cascade
of the $\gamma$-rays accompanying the neutrinos. When injecting protons with a
hard spectrum, our model may explain the observed neutrino flux above $\sim 10$
TeV. It predicts a unique sub-TeV $\gamma$-ray component, which could be
identified by a future observation. Jet-ISM interactions are commonly observed
in the proximity of jets of both supermassive and stellar-mass black holes. Our
results imply that such interaction regions could be $\gamma$-ray obscured
neutrino production sites, which are needed to explain the IceCube diffuse
neutrino flux.
