A forensic team has also reached the spot and is carrying out investigation.
Police suspect the gunmen belonged to the ULFA-Independent faction as they were in battle fatigue.
A day after violent protests in the state capital, a silent sit-in demonstration was organised on Monday against the brutal killing of the two men in Karbi Anglong.
In a video of the incident circulated on social media, the two men can be heard begging for their lives and trying to explain to the livid crowd that they were innocent but to no avail.
The explosion took place at a construction material dump in the Pan Bazar area when the four passersby, including a woman, were injured around 11.45 am, the sources said.
WhatsApp hoax triggers lynching of two others in Maharashtra's Aurangabad.
The Assam government announced a compensation of Rs 5 lakh and a job for the next of the kin of the deceased.