I figured it out, DOH!
KEYWORD ... DISTINCT -_-
INSERT INTO [DMS].[dbo].[Deductions]
(
CustomerID,
DeductionCode,
DeductionDescription
)
SELECT DISTINCT
a.CustomerID,
ISNULL(a.AdjustmentReason, 'UNKNOWN'),
ISNULL(a.AdjustmentReason, 'UNKNOWN')
FROM @CreditDebitAdjustmentDetail a
WHERE NOT EXISTS ( SELECT 1
FROM [DMS].[dbo].[Deductions] b
WHERE a.CustomerID = b.CustomerID
AND CASE a.AdjustmentReason
WHEN NULL THEN 'UNKNOWN'
WHEN '' THEN 'UNKNOWN'
END = b.DeductionCode )