Moving to app/assets/templates doesn't render the .erb file correctly

angular-rails-templates-images.markdown

Before

app/views/templates/404.html.erb

<%= image_tag "glass_magnifying_200x175.jpg", :size => "200x175", :alt => "", :class => "cc-right" %>

After

app/assets/templates/404.html

<div class="cc-right cc-page-status-magnifying"></div>

.cc-page-status-magnifying {
    background-image: asset-url("glass_magnifying_200x175.jpg");
    height: 175px;
    width: 200px;
}

For some reason app/assets/templates/404.html.erb doesn't seem to work with image_tag, it doesn't get parsed by rails. Is there something in the configuration that we need to set up?