commanding officer

To understand the phrase you need to know what a commanding officer is. Merriam Webster defines the term as

an officer in command especially an officer in the armed forces in command of an organization or installation

In the case of Kurmiss in the quote you give Kurmiss (whoever he was) was a member of the Tilsit SD detachment (whatever that was) which had an officer in overall charge of it who was the commanding officer of the detachment and, therefore of Kurmiss.

Thus Kurmis’s commanding officer with the Tilsit SD detachment (Heinz Gräfe) was the commanding officer of the detachment.

This does not necessarily mean that Kurmiss was a direct subordinate of Gräfe, there might have been at least one lower-ranking officer to whom he was responsible, but the lower-ranking officer would have been responsible to Gräfe and Gräfe would have overall command of Kurmiss.

The situation is somewhat similar to that in a civilian organisation (such as a large supermarket) where a store manager (Alice, say) who reports to her area manager (who, in turn, reports to the board of the company) has a number of section managers or supervisors who report to her.

This means that there could be a checkout operator called Chris who's work is managed by the checkout supervisor called Bob who reports to Alice. In this case Bob is Chris's line manager but Alice is both Bob's and Chris's store manager.

In a parallel way Gräfe was Kurmiss's commanding officer