Creo que insertar la expresión de caso original en el lugar correcto debería funcionar. Prueba esto:
PROCEDURE [dbo].[CreateLandingPurchaseOrderDetails]
-- Add the parameters for the stored procedure here
@startDate DATE, @endDate DATE
AS
BEGIN
-- SET NOCOUNT ON added to prevent extra result sets from
-- interfering with SELECT statements.
SET NOCOUNT ON;
-- Insert statements for procedure here
SELECT (
SELECT
Contacts.ContactId AS '@ContactId',
LandingHeaders.VesselOwner AS '@Owner',
FORMAT(SUM(LandingDetails.Quantity * LandingDetails.UnitPrice), 'N2') AS '@Owed',
SocietyMemberships.WeeklyDeductionRate AS '@WeeklyDeductionRate',
SocietyMemberships.FromMinimumReturn AS '@FromMinimumReturn',
Deductions.DeductionRate AS '@DeductionRate',
CASE
WHEN SUM(LandingDetails.Quantity * LandingDetails.UnitPrice) - (SUM(LandingDetails.Quantity * LandingDetails.UnitPrice) * DeductionRate + WeeklyDeductionRate) > FromMinimumReturn
THEN SUM(LandingDetails.Quantity * LandingDetails.UnitPrice) * DeductionRate + WeeklyDeductionRate
ELSE SUM(LandingDetails.Quantity * LandingDetails.UnitPrice) * DeductionRate
END AS '@TotalDeductions',
(SELECT DISTINCT
ld1.ProductId AS '@ProductId',
FORMAT(AVG(ld1.UnitPrice), 'N2') AS '@Cost',
FORMAT(SUM(ld1.Quantity), 'N2') AS '@Quantity'
FROM LandingDetails ld1
INNER JOIN dbo.LandingHeaders lh1
ON ld1.LandingId = lh1.LandingId
WHERE Posted = 0
AND lh1.VesselOwner = LandingHeaders.VesselOwner
GROUP BY ld1.ProductId
FOR XML PATH ('Products'), TYPE)
FROM dbo.LandingDetails
INNER JOIN dbo.LandingHeaders
ON LandingDetails.LandingId = LandingHeaders.LandingId
INNER JOIN dbo.Vessels
ON LandingHeaders.VesselId = Vessels.VesselId
INNER JOIN dbo.Contacts
ON Vessels.OwnerId = Contacts.ContactId
INNER JOIN dbo.SocietyMemberships
ON Contacts.SocietyId = SocietyMemberships.SocietyId
INNER JOIN dbo.Deductions
ON Vessels.DeductionId = Deductions.DeductionId
WHERE LandingHeaders.Posted = 0
AND LandingDate1 BETWEEN @startDate AND @endDate
GROUP BY ContactId,
LandingHeaders.VesselOwner,
SocietyMemberships.WeeklyDeductionRate,
SocietyMemberships.FromMinimumReturn,
Deductions.DeductionRate
ORDER BY ContactId
FOR XML PATH ('Owner'), TYPE)
FOR XML PATH ('PurchaseOrders'), TYPE
END
La consulta probablemente se puede mejorar, pero sin definiciones de tablas y algunos datos de muestra, es un poco difícil probarla.
Mira este SQL Fiddle para una versión ligeramente modificada que debería dar el mismo resultado.